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Converter Fails at 1% - "An error occurred during the conversion: 'converter.fault.ConverterFileFault'"

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I'm attempting to convert a aging laptop to a VM but it fails at 1% with the vague error "An error occurred during the conversion: 'converter.fault.ConverterFileFault"

With VMware vCenter Converter Standalone Client 5.5.1 build 1682692  running locally converting the currently running machine.

On a laptop with WinXP Sp3, with a single drive, saving the VM to an attached USB harddrive.

 

I have run chkdsk on the drive. (with /F option) and defragmented

Shadow copy services have been restarted and are running.
This is with the latest Converter client,

No firewall is active.

I am logged in as administrator

Drive isn't encrypted as far as I can tell (no Truecrypt)

The xp included backup utility works

 

I have looked at the other issues/logs here but don't see the exact same one

VMWare Converter error: failed to clone volume C

Convertor Fails at 1%


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