Both conversions are in this file, thanks.
About transfer and VSS error it's obvious that there is no enough free space for snapshot, on system(boot) volume, you should free some space in order to start VSS successfully. You should google your error code 0x8004321F and see for suggestion and/or advices or upgrades from Microsoft.
About transferring only C: volume - it can't be transferred alone, with reconfig, because the boot partition is the "System Reserved" partition, only transferring both will succeed to reconfig the destination OS to boot in VM environment.
HTH