"Jesus Christ is identified in all standard works of scripture used by Latter-day Saints as the Only Begotten Son of God (Jacob 4:11; D&C 49:5; Moses 1:6; John 3:16). In a classic sermon delivered by President Joseph F. Smith at the Box Elder Stake conference of December 20, 1914, as recorded in the Box Elder News of January 28, 1915, the following inspired insights were given: "How are children begotten? I answer just as Jesus Christ was begotten of his Father. Just as the infidel was begotten and born, so was Christ begotten by his Father. We want to try to make it appear that God does not do things in the right way, or that he has another way of doing things than what we know; we must come down to the simple fact that God Almighty was the Father of His Son Jesus Christ. Mary, the virgin girl, who had never known mortal man, was his mother. God by her begot His son Jesus Christ, and He was born into the world with power and intelligence like that of His Father."
Elder James E. Talmage has written: "That Child born of Mary was begotten of Elohim, the Eternal Father, not in violation of natural law but in accordance with a higher manifestation thereof; and the offspring from that association of supreme sanctity, celestial Sireship, and pure though mortal maternity, was of right to be called the 'Son of the Highest'" (Talmage, 81).
******According to President Smith, "Mary was married to Joseph for time. No man could take her for eternity because she belonged to the Father of her divine Son." (Box Elder News, Jan. 28, 1915.) *******

The term only begotten means exactly what it says. Though God the Father is the pre-earth father of all His children conceived and born in the spirit world-of whom Jesus was the first-only this Son, Jesus the Christ, also had a Heavenly Father of the flesh."
Reference: Hoyt W. Brewster, Jr., Doctrine and Covenants, Encyclopedia , p.398-399

JOEL - Thanks for the references. The Joseph Smith quote and the Talmage quotes seem to contradict each other a little. Smith seems to imply that God did not use another way to cause the conception of Jesus; that it was done the same as the "infidel was begotten", while Talmage claims it was by a "higher manifestation" of the natural way, whatever that means. People try to interpret quotes like this to answer the question about whether God had physical sexual relations with Mary. The majority of the information about this that I have seen, seems to imply that we simply don't know how it was done, but that it is doubtful that actual sexual intercourse was involved in the same way mortals do it. God the Father was literally the biological father of Jesus, but exactly how He placed His seed inside Mary at the same time maintaining her virginity is an unknown.

That is an interesting quote from President Smith about the marriage of Joseph and Mary. He may be right about them being married for time only at the time they raised Jesus, but consider the fact that Mary and Joseph had other children together besides Jesus(Matt. 1:25; 13:55-56; Mark 6:3, Gal. 1:19). Would they not want to be sealed to them and therefore to each other to have an eternal family? To me an obscure quote like that from Smith seems to fall under the category of personal opinion as opposed to official revealed church doctrine. In my opinion I think the bottom line is that we don't really know.