You actually can do it by a number of methods (at least by VMWARE).
One of the most normal methods of doing this is to use P2V conversion software (Physical to Virtual) which will take your Real Windows XP (or other OS) system and create a Virtual machine out of it.
Another method is to
1) backup your REAL OS with imaging software like Acronis True Image.
2) Start your Virtual machine software
3) use the Stand Alone bootable restore True Image software to restore your OS inside the virtual environment -- use Universal Restore option
After bootup you'll get loads of Hardware messages -- just ignore all those.
If this BSOD's on startup the create a simple windows XP virtual machine from scratch and install vmware tools. DON'T INSTALL ANY OTHER APPS.
Install the Acronis True Image product
Now resture your old XP image from within the Virtual Machine environment with the Universal Restore option -- this should work since some of the VM drivers
it will use from the exiting Virtual machine just created.
Note on your XP virtual machine you will find some apps that make direct use of specialized hardware like DIRECT X won't work so you won't have video streaming or much multi-media such as DVD playing (audio apps are fine).
(The same method SHOULD work on Virtual Box -- I just use vmware)
I have some minidisc applications which will ONLY run on XP. I have some others as well but I use the MD recorders a lot so I'm keeping XP around for a while yet.
I built my XP VM as above and its fine. Even things like Photoshop work 100%.