Stil the same error:
2013-06-19T11:35:58.995-04:00 [01364 info 'Default'] Sysimgbase_DiskLib_OpenWithPassPhrase failed with 'The specified virtual disk needs repair' (error code:14)
Because this could be incompatibility with older VMDK format you can downgrade the Converter version to 4.3 or 4.0.1 and try the conversion again.
If you succeed with conversion but fail with reconfig, you can try the reconfig only task on destination VM with latest version (i.e. 5.1).
HTH