Hello
I want to clarify something (you probably got it right, but just in case). When you convert a powered off Hyper-V VM, the agent should run in the Hyper-V server, when you convert a powered on VM - it should run in the VM itself.
I assume you have the second case. According to the logs the agent has been installed correctly. This means converter has access to the source machine. Perhaps it could not connect to the agent afterwards (the "class Vmacore::TimeoutException(Operation timed out)" message is misleading, the issue is somewhere else). Check whether a firewall (internal in the source or external) does not prevent the connection.
HTH
Plamen
P.S. Attach the whole log if this doesn't help