virtual desktop -vs- virtual console

[bpark]

Can someone tell me what the difference between these are?

bp

[Dolda2000]

Virtual desktops are managed through the window manager. It simply hides all windows that aren't on the current desktop. (Unless they are sticky windows)
Virtual consoles, however, or virtual terminals as they're really called, are managed through the kernel. Each VT is connected to a corresponding /dev/tty[0-9]* device file. By default, init spawns a mingetty on the first six VTs, and the X server claims the 7th, which it puts in graphical mode and raw keyboard mode. The reason you can't switch between VTs with ALT+F* while in X, is just because the X server puts its VT in raw keyboard mode, so the kernel doesn't parse the ALT+F* keys at that time. I don't think it parses ALT+CTRL+F* keys either, but that the X server parse these and send escape sequences to /dev/console, but I'm not completely sure of what implementation is used.
Virtual desktops and virtual terminals are two completely different implementations, although they do resemble each other and are usually managed with the same key combinations.