How do we keep track of time?

I ask because there are some timing quirks running under VirtualPC (if
my Mac is busy, I get about 6:1 time compression), and I'm trying to figure
out whether this could be fixable.

I'm assuming we aren't just watching the "hardware" clock.  What do we do?
Is there a way to make it sensible on a system whose clock speed can vary
by a factor of ten over a few minutes?

-s