Question: Is there a way for me to take my current PC and transfer it to a VM running on the same machine or another machine?

I am currently running Windows XP.

Answer: 
When using VMWare, there's a tool called [VMWare Converter](http://www.vmware.com/products/converter/) that can make a VM image out of your machine.
You are looking for something called P2V (physical to virtual) most VM solutions have it. But you will get better responses on server fault.