Hello
The timeout and the long expected conversion time both point to a slow network. Check your environment.
The destination hardware version is not in the properties file, you should change the code. Look for BuildCloningParams in Program,cs and set targetVMSpec.hardwareVersion to "vmx-08".
Generally I'd recommend using the enhanced samples (Re: Enhanced C# SDK samples) They are much more configurable, though in the case of destination hw version they also aren't.
Regards
Plamen