Machines can be converted from physical machines to virtual machines (P2V) by simple cloning. This works the same way as cloning the machines from physical to physical.
Converting a physical machine to a virtual machine (P2V) for VMware, can most easily be done with VMware's own VMware converter.
Known issues Edit
Converting a Windows 2000 machine with VMware converter 3.0.3, might ask you for scsiport.sys. If this happens, the VM can give a BSOD on first boot. It can be avoided by installing the Update Rollup 1 for Windows 2000 SP4 (KB891861) before converting the machine.
Windows issues Edit
Windows has issues with being moved to different hardware. See Migrating windows for details and fixes regarding this issue.