This is an issue I discovered yesterday after downloading the Windows Phone SDK and trying to build a small app in Visual Studio 2012. Now, had I read the system requirements I would have known to check this before I attempted an install, but I didn’t, I assumed my laptop could run the SDK fine.
It installed relatively hiccup free but when I went to run my app on an emulator I realised I didn’t have the option. Instead I was only given the ‘Device’ option.
After some searching I discovered that in order to run the emulator my computer needed to support SLAT (Second Level Address Translation). There is a tool to check if your computer does support SLAT here: http://slatstatuscheck.codeplex.com/