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VMWare Converter - "unable to read the block at offset" error

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I am trying to convert a physical Windows XP machine to VM using the VMWare vCenter Converter and having I am having a problem such that I keep getting the following error:

 

Warning: Unable to read the block at offset '173,383,680' on volume 'C:'.

 

I tried this multiple time and keep on getting the same error, with DIFFERENT OFFSET number each time. The funny thing is that the Converter app reported that the conversion is COMPLETED but the Task List show it wa only 98% completed, as shown in the Log Highlights:

 

STATUS: Failed at 98%


4:12:40 PM: Completed cloning volume 'C:'.

3:49:28 PM: Warning: Unable to read the block at offset '173,383,680' on volume 'C:'.

3:49:15 PM: Starting to clone volume 'C:'.

3:49:08 PM: A snapshot of the source system was created successfully.

3:49:00 PM: Creating a snapshot of the source system.

3:48:47 PM: Task: Convert physical machine.

 

 

When I take the VM file and try to start it on a VMWare Workstation, the app complained that it cannot "locked" the image.

 

Does anyone know what does this mean?

 

Here's the background system and information:

 

I. PHYSICAL MACHINE

Windows XP Profession with SP3

Intel i7 Quad-Core w/ 4GB of RAM

PointSec is installed to encrypt the entire HDD (AFAIK, this is not an issue for VM conversion)

PGP Enterprise is installed but NOT to encrypt the entire HDD

 

 

II. VMWare vCenter Converter Standalone

Version: 5.0.0-build 470252

Conversion Configuration

- Destination: external USB HDD connected to the physical machine

- Destination product: VMWare Workstation 7

- Disk Controller Type: AUTO

- Storage: Volume-based cloning

- Create disk 0 as: Not pre-allocated

- Remove restore checkpoint: YES

- Reconfigure virtual machine: YES


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