Disk2VHD is free and easy to use, but it has limitations as to disk size and where the VHD is installed.
A new version, 1.62, was posted 7/29/10. Might be better. Haven't tried it yet.
A note at the end of the posting indicates that physical-to-virtual migration is ok from retail versions of software and Software Assurance licenses, but it is not ok to make VHDs from OEM software.
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