This is a typical scenario, there are a few threads already discussed this, for example:
Make your Live system into a VHD
You will have to adjust kernel images and registry settings in order to make it to boot, since vm has a different set of hardware configuration.
You can use our VMLite to make your VHD file to be bootable. Install VMLite, then launch the VMLite Wizard, use the 2nd option to import your VHD. The wizard will automatically adjust all settings and make it bootable.
Alternatively, you can use our MyOldPcs to convert your physical PC to a VHD file.