Thats just dual booting. That wont work with the law if the contract says anything created using company hardware is theirs.
And yes, some companies need to give you a green light to work on projects in your free time, because they might have a team doing similar things somewhere, it might compete in something they would like to do in the future or like you said, might use company know how which is a huge nono. Its bs imo, but those clauses and rules are found in some employment agreements.
Remember, always read your employment agreements!