Qui Hong, Chris Huss and Mike Laverick produced a free physical to virtual (P2V) application, a must-have in your virtualization toolbox:
Ultimate-P2V is a free plug-in that allows you to clone a physical machine to virtual machine – and perform the neccessary “system reconfiguration” required to make it bootable. Without this tool or a commerical P2V tool the virtual machine would just give a blue screen of death.
Read the manual and download it here.