The short answer is:
[[router R1]] image = c7200.bin serial0 = "R2 serial0" This tells Dynamips to create a direct serial cable between the two virtual devices on boot. A common mistake is logging into the router and typing: virtual device serial0 will start disconnected
The no shutdown command fixes administratively down (interface disabled by software). It does fix hardware down (no cable, no carrier signal). The "virtual device will start disconnected" message is a hardware-level notification. You cannot fix it with IOS commands; you must fix it in the emulator GUI. The Clock Rate Caveat (DCE vs DTE) Even after you connect the virtual cable, you might still face a down/down or up/down status. After fixing the "start disconnected" message, ensure you have a clock rate set on the DCE side. The short answer is: [[router R1]] image = c7200