It should work. The only reason it might not is if the Virtual PC Additions installer no longer supports Windows 95. I don't believe that's true. It isn't the version of Mac OS X that affects this. Whether Windows 95 works or not is entirely dependant on the version of Virtual PC (if it is affected at all). I know Windows 95 works under VPC 6 and older. I no longer use Win 95 on my Virtual PC, which is version 7 now, but I would be surprised if it didn't work.
What exactly is the problem you are having? If you can get it to boot from a DOS floppy and run setup on the Windows 95 CD, then it should install. I actually have a USB floppy that I have used to do this, but you can also try to make an ISO image of a boot floppy to get it to work. I don't think you can boot directly from a Windows 95 CD, however. Man, it's been a few years since I installed Windows 95 on anything. It never was simple.
