How to convert Physical machine as virtual hard disk
Disk2vhd is a utility that creates VHD (Virtual Hard Disk – Microsoft’s Virtual Machine disk format) versions of physical disks for use in Microsoft Virtual PC or Microsoft Hyper-V virtual machines (VMs). The difference between Disk2vhd and other physical-to-virtual tools is that you can run Disk2vhd on a system that’s online. Disk2vhd uses Windows’ Volume Snapshot capability, introduced in Windows XP, to create consistent point-in-time snapshots of the volumes you want to include in a conversion. You can even have Disk2vhd create the VHDs on local volumes, even ones being converted (though performance is better when the VHD is on a disk different than ones being converted).
Disk2vhd includes command-line options that enable you to script the creation of VHDs. Specify the volumes you want included in a snapshot by drive letter (e.g. c:) or use “*” to include all volumes.
Usage: disk2vhd <[drive: [drive:]…]|[*]> <vhdfile>
Example: disk2vhd * c:\vhd\snapshot.vhd
Download link :- http://download.sysinternals.com/files/Disk2vhd.zip