You're trying the 'hot' route (live with power is considered "hot")... Install it onto the source server and try again. That eliminates any connection issues between your PC, the source server and the ESX/ESXi host that will be running it.
Which converter version are you using?? As already mentioned, you could try an older release to see if that behaves better. OR a third party converter (install it onto the source if possible).
Typically, I'll use the VMware Converter that's part of the vCenter Server first. IF that doesn't fly, I'll install the current standalone product onto the source server. IF that doesn't work, I'll use the VizionCore vConverter product on the server. Using that process path, I've had great success... Since I don't recall which way I did a server going back to Win2K, you'll need to try the above methods until you get to one that works... I would try booting from the cold clone CD so that you also eliminate any software running on the host being the cause for the failures. Otherwise, stop all but critical services (for the OS) on the source before you kick off the next attempt... The VizionCore product has a section where you can do that within it, before the conversion actually starts (if I recall correctly, not sure about the VMware converter)...
VMware VCP4
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