The Windows Phone 8 emulator requires Client Hyper-V, which is a new feature of Windows 8. The emulator is an x86 virtual machine, which runs an x86 build of Windows Phone 8, and makes use of the RemoteFX technology for hardware virtual GPU support. It's so it runs at a high percentage of real device performance, and is very closely compatible.
Unfortunately, for hardware reasons, Hyper-V cannot be nested. In the Intel and AMD processor virtualization models, a guest operating system cannot itself be a nested hypervisor.
RemoteFX requires Second Level Address Translation. How to check if your processor supports it.
If you want to use the emulator, I'm afraid you have to install Windows 8. You can always dual-boot. Alternatively, get a phone developer-unlocked so you can debug on real hardware.