How do I configure physical network adapter for a virtual machine?

How do I configure a physical NIC on a server to attach a virtual machine to?

This is what is done so far:

Installed Hyper-V role
Ran Integrated services
Installed Server 2008 32 bit
configured virtual network
installed virtual NIC, bound to 2nd physical NIC on server
Updated Windows through working virtual adapter

I had previously configured the physical NIC I wanted to use for the VM with the IP address needed
for the network.
During the setup of the virtual NIC, I gave it the MAC address of the physical NIC

I started the VM, and configured the virtual NIC with the same IP address of the physical NIC.

As stated above, the VM connected to the Internet to do the updates.

When I looked in DNS, the IP address I had give to both the physical NIC and the virtual NIC was registered to the physical server name.  I need it to be registered to the VM server name.

I thought the VM NIC settings over wrote the phyiscal ones, but apparently not.

Can someone please point out what I did wrong here, and advise on how to set it right?