VMware Converter 6.2 error 1 % FAILED: A file I/O error occurred while accessing ”.

1 physical server with AD,DNS,DHCP and file services. I want to convert the physical server to a virtual machine with Vmware Converter 6.2
Went to 1% and then failed with error:
vmware converter FAILED: A file I/O error occurred while accessing ”.

The only thing I did was add below entry in the host file, nothing else. No reboot or anything just add and rerun the job.

Add to vc and esxi to host file
192.168.1.1 vc01.domain.se vc01
192.168.1.2 esxi.domain.se esxi

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