The below information is taken from this post from here. I copied a majority of the text just in case his site disappears one day since this information is really valuable.  I would like to give credit to Ben Armstrong for providing invaluable information on the topics surrounding Virtual PC, Virtual Server and its benefits and pitfalls.

One cool use of Virtual PC is as a ‘backup’ during a physical computer migration.

What I do is:

1. Setup the new computer with Windows, virtual PC, and as many of the applications from the old computer that I know about
2. Take the hard disk out of her old computer and attach it to the new computer
3. Boot up the new computer
4. Go into the Disk Management tool under Windows (Control Panel –> Administrative tools –> Computer Management –> Disk Management)
5. Select to remove the disk letter from the hard disk from the old computer
6. Start Virtual PC
7. Use the Virtual Hard Disk wizard to create a linked virtual hard disk pointing to the hard disk from the old computer
8. Then use the Virtual Hard Disk wizard to convert the linked virtual hard disk to a dynamic virtual hard disk
9. Wait a long time (usually 2 to 3 hours)
   1. Any anti-virus software should be disabled for this step – otherwise it will take a lot longer
10. Create a new virtual machine that points to the new virtual hard disk
11. Boot up the virtual machine and confirm that everything works
    1. There are a few things that can cause this to fail – and I will discuss them in further depth in coming posts
12. Install the Virtual Machine Additions and shutdown the virtual machine
13. Shutdown the new computer and remove the old disk

Once this is done – I can begin migrating data and application information from the virtual machine to the physical computer over the network. But the best thing is that if a program doesn’t work – you can just launch the virtual machine and use it there for now.

You might also run into a problem during this process that can be resolved using the following method (original post can be found here):

This post is going to focus on migrating Windows systems – but there are similar issues with migration of most other operating systems.

Problem 1: “STOP:0x000007B Inaccessible Boot Device”

You image the physical computer to a virtual machine – and now when you boot it blue screens almost immediately with a “STOP:0x000007B Inaccessible Boot Device” message.  What is going on?  Well, Windows maintains a list of ‘critical boot devices’ that are loaded in order to boot the system.  One of these devices is going to be the hard disk controller that you boot the system off of.  Sometimes – your physical computer will be close enough to the virtual machine that you do not see this error message.  However – if you do see this problem – you will need to do the following:

1. Go back to the original physical computer
2. Boot Windows
3. Go to ‘Start’ –> ‘Control Panel’ –> ‘Administrative Tools’ –> ‘Computer Management’ –> ‘Device Manager’
4. Expand the ‘IDE ATA/ATAPI controllers selection’
5. Double click the ‘controller’ entry (not the ‘Channel’ entries)
6. Go to the ‘Driver’ tab
7. Select ‘Update Driver’
8. Select to ‘Install from a list or specific location (advanced)’
9. Select ‘Don’t search. I will choose the driver to install’
10. This should display a list with your specific controller and a Standard / generic controller.  Select the standard / generic controller.
11. Finish the wizard
12. Shutdown the system
13. Attempt to migrate the system again

This is the only problem that I am going to discuss in this series that requires you to make a change to the physical system before you migrate it – but thankfully it is a non-destructive change – as you will still be able to boot the physical system with no problems after this change.