For windows XP or greater it is very easy.
Disk2VHD is a free microsoft utility that runs under windows and created a VHD on the same computer, that is a model of the machine. This can be attached to a virtual machine in Virtual PC and started. All that is required is sufficient disk space on the machine to create this VHD. On the first machine I tried this on it took a few hours to build.
Download Disk2VHD here http://technet.microsoft.com/en-us/sysinternals/ee656415.aspx
For Windows 2000 and older this approach will not work.
This did not work either.
Final course, I am going to pull the HD out of the laptop running windows 2000, plug it into a Windows 7 machine, and use Disk2VDH to clone it from there.