As I said, this all about installing an configuring the android emulator. In few words you cannot have an emulator without the SDK installed. The website of Android is quite complete but look a bit dispersive at the beginning. What follows is a short list of links for setting up your Android emulator.
1) Download the Android SDK according with your OS.
2) (optional bur recommended) Download a fresh version of Eclipse (3.4 or 3.5)
3) Install the Android Development Tools (ADT) Plugin
4) In the plug-in configuration you should add the platforms that you need (i.e Android 1.6 and/or 2.1)
5) Start an New Android Project and build an hello world
Done, now your emulator is up and running within you eclipse.