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 an online system. 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).
It will create one VHD for each disk on which selected volumes to reside. It preserves the partitioning information of the disk but only copies the data contents for volumes on the selected disk. This fact enables you to capture just system volumes and exclude data volumes, for example.
Note: Virtual PC supports a maximum virtual disk size of 127GB. If you create a VHD from a larger disk, it will not be accessible from a Virtual PC VM.
To use VHDs produced by Disk2vhd, create a VM with the desired characteristics and add the VHDs to the VMs configuration as IDE disks. On first boot, a VM booting a captured copy of Windows will detect the VMs hardware and automatically install drivers if present in the image. If the required drivers are not present, install them via the Virtual PC or Hyper-V integration components. You can also attach to VHDs using the Windows 7 or Server 2008 R2 Disk Management or Diskpart utilities.