Git repository in a Git repository

You can have nested git repos:
The parent repo will simply ignore nested repo.

jleedev comments and illustrates with this gist script that the parent repo would track the nested repo state through a gitlink.
(gitlink = SHA-1 of the object refering to a commit in another repository. Git links can only be specified by SHA or through a commit mark.
A gitlink has a special mode '160000', used for submodules, but also present for simple nested repos).

However, usual commands would not acknowledge the nested repo: add or commit would apply only in one repo, not the other.

git submodule would allow to reference the nested repo from the parent repo, and keep an exact reference of the child repo.

Another alternative could involve:

• two separate Git repos (not nested)
• a symlink from one to a specific part of the other (both Unix, but also Windows Vista+ have symlinks)

You are trying to accomplish something called a "submodule".

Please check out Git Tools - Submodules to find out how it's working.