My conversion was failing at 1%, as soon as it started 'creating virtual machine'. Banged my head against the wall for a bit before finding a solution. Thought I would post in case anyone else has the same issue.
I first googled the error and came up with this page: www.vmware.com/support/converter/doc/releasenotes_conv301.html which says that if you have a VM with the same name it can fail with 'an unhelpful help message'. Well, that wasn't the issue as I definitely didn't have a VM with the same name.
What it turned out is that VMware converter was reporting the remaining space on one of my LUN's wrong. It said I had around 93GB left on a particular LUN (the VM I was converting was to be around 60GB) but I noticed in VC that there is actually only 54GB left on that particular LUN. Anyway, as soon as I changed my destination to a LUN with more space the conversion proceeded normally. Hope this helps. Now I just need to figure out why converter is reporting space wrong.