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).
The Disk2vhd user interface lists the volumes present on the system:
It will create one VHD for each disk on which selected volumes reside. It preserves the partitioning information of the disk, but only copies the data contents for volumes on the disk that are selected. This enables you to capture just system volumes and exclude data volumes, for example.
More info at :http://technet.microsoft.com/en-us/sysinternals/ee656415.aspx
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.