Identified the possible reasons for failure:
1. Networking security on the source - it should allow connections from the destination VM as long as the Converter Server machine. If destination VM is not allowed to connect to the source (e. g. hosts.allow/hosts.deny files) then this error might occur.
2. Host SSH server is not using RSA protocol 2 keys. If it uses DSA or RSA1 keys, then Converter cannot connect to the source (it is a bug in the product introduced in version 5.1). You can check this configuration in your sshd config file (by default under /etc/ssh/sshd_config).