Failed: Unable to find the system volume, reconfiguration is not possible

I am trying to convert an old DELL Inspiron Windows XP system to VM with no apparent success. Always stops at 98% with an error "Failed: Unable to find the system volume, reconfiguration is not possible".

Did all kinds of trials with Recovery Console - CHKDSK, FIXMBR, FIXBOOT.

The system boots to XP properly.

I am attaching log of the converter.

Contents of the boot.ini:

-

timeout=30

default=multi(0)disk(0)rdisk(0)partition(1)\WINDOWS

multi(0)disk(0)rdisk(0)partition(1)\WINDOWS="Windows XP" /Fastdetect

-

Hope, someone points me to the right direction.

Thanks

Venkat.