I spent the bulk of yesterday and a good chunk of this morning trying out a new tool from Acronics called "true image". It is primarily a backup utility however it has this cool feature that allows you to convert the backup to a VHD/VMK..Two step P2V (Physical to Virtual), which I could live with if it worked fine.I had some issues so far, but I'm thinking it might have to do with my network connections. You see, I was using a remote drive over wireless as the destination disk for the backup, so after 2 hours of backup I tried converting it to VHD but the process failed half way through.
I'll give it another go, this time with all local components.