Hello,
Should the share should be created on the server where the Converter is installed? I assume this is the case... Can the share be where the converter is installed or does it need to be on another server?
It doesn't matter. However it should be a network share on a machine that is accessible both from the Converter Server machine and the source machine. This implies that if you create the share on the Converter Server machine, you cannot specify it as \\127.0.0.1, but have to use the real IP address.
Does the Converter need special permissions to the share?
Both Converter server and source machine users need write permissions to the share. Other than that no special permissions are required.
Is there a user that needs access to the share running as the Converter?
When you specify a network share, you should also provide the username and password for accessing it. Converter Server and Agent (running on the source) use these credentials when accessing the share.
Is there a problem doing this over a VPN?
Well, in the case when vCenter server is involved (either as a source or a destination), the network protocol used for data transfer is sensitive to network latency. It is a gray area, but experiments have shown that if the ping timeout is more than 10 ms then you can expect some issues. However in your case you want to convert a running machine to a file share, so you should not be exposed to this issue. Other than that VPN should not matter, unless some of the required ports for communication are blocked by a firewall (a complete list of required ports between all parties - Server, source and destination share - is available in the User's Guide).
Hope this helps,
Ivan