Hello Gary,
as far as I know, there should be no changes done that should prevent JoomSEF component to work with VM if it was working with 404SEFx. We haven't tested it yet, but the modifications we did should not break the original funcitonality, just improve it and fix some bugs.
If you were getting 404 messages, then I think it might be more related to some misconfiguration that the rewrite engine functionality.
Anyway, we try to test the component with VM asap. and also create an optimized extension for it. If you manage to fix the problem and find out more, let us know.
Best regards,
Jirka