In this post, Morten Nielsen explains how to simulate GPS on WP7.
Source: SharpGIS
While building some of my latest WinPhone apps, I needed to be able to able test moving around on a map, while being able to debug. However I preferred doing this at the comfort of my desk. So I had to “fake” a GPS signal. Luckily the GeoCoordinateWatcher class that is used for this, implements the interface “IGeoPositionWatcher<GeoCoordinate>”. If I were to create my own class that implements this interface, I had an option for using a separate class for receiving data from the location service. I ended up needing two types of location simulators for my routing app: One that starts at a given location and direction, and randomizes speed and direction over time.