Looking at the log you are trying to create two disks on the target - one on datastore s-fs-1-Data and one on datastore s-fs-1-OS. The error is
2012-03-27T09:52:05.288-07:00 [04112 info 'Default'] [,0] Error 3 opening disk vpxa-nfc://[s-fs-1-OS] s-fs-1.doubleline.corp/s-fs-1.doubleline.corp.vmdk@172.30.0.104:902!52 b5 c6 d3 ce 0d 77 9c-79 1b 64 a4 fc df 6c e6.
2012-03-27T09:52:05.288-07:00 [04112 error 'Default'] [BaseDiskSetComputer::DoOpen] OpenDisks failed, mntapi error: 50
2012-03-27T09:52:05.288-07:00 [04112 error 'Default'] [BaseDiskSetComputer::AnalyzeErrorAndThrow] Error occurred when opening disk set, MNTAPI_ERROR = 50 MNTAPI errorType = 2, errorCode = 3
It is failing to open the disk on s-fs-1-OS datastore. It is not clear whether the other disk has been opened successfully. While opening a disk on the datastore Converter tries to create a temporary file in tmpdir. Error code 3 means "path not found" and it is reported when for some reason the temporary directory could not be created. It should look like vmount-temp\vmware-logX under curent temp directory. It might be related to user permissions - try to do the same when logging on with local administrator on the machine where Converter Server is installed, and also try to disable UAC if it is on.
HTH