How should I convert a physical drive to a VHD for use with VirtualPC?

WinImage can open Virtual PC and VMWare images, convert between physical and virtual, and even convert between VMWare and VHD. This is a incredible tool, has a 64 bit version and and is free.

WinImage Site

Well, it's really, really easy to convert physical disks to VHDs with Hyper-V: http://blogs.msdn.com/virtual_pc_guy/archive/2008/04/08/copying-a-physical-disk-to-a-virtual-hard-disk-with-hyper-v.aspx

If I were going to do this with VMware, I'd create a new VM with the same number, size, and type (IDE or SCSI) disks as the host computer. I'd also add SCSI disks that connect to the physical hard disk drives (already mounted up in the host computer). I'd boot a disk imaging program on the VM (Ghost, Clonezilla, etc) and clone the SCSI disks representing the physical disks over to the virtual disks.

That looks possible with VirtualPC to a point, but the release notes for VirtualPC 2007 (http://download.microsoft.com/download/4/4/c/44ccd131-67fb-4224-a96e-193be1765b43/relnotes.htm) say that attaching physical disks to VMs is no longer possible. (Seems like a silly thing to remove...)

Now, after you convert those disks, will they boot? Who knows. If the original system was using IDE disks, I'd say you've got an 80/20 shot that it'll boot. You'll see a lot of driver detect messages, and you'll have to use a virtual machine manager that has driver support for WinME for its virtual devices. That may be a challenge.

Hope that gives you some ideas.

I recently played with VMWare VCenter Converter Standalone (free download from vmware site). I noticed this had an option to convert a physical machine into a virtual machine, and whilst I didn't try this option myself, this might be worthy of further investigation for your needs. There seems to be a few tools out there to convert between the various VHD formats so you might be able to get it back into Virtual PC. YMMV.