From the vCenter Converter release notes: VMware vCenter Converter Standalone Release Notes
Converter can convert FAT/FAT32 volumes during hot cloning only if the source machine has at least one NTFS volume
For source machines running under Windows versions earlier than Windows Server 2008, VSS can take snapshots of FAT/FAT32 volumes only if the source machine has at least one NTFS volume. For all operating systems that support volume-based cloning, you need at least one NTFS volume for VSS to work.