Today I realized it’s also beneficial to duplicate the HOSTS file on a machine that is being converted from physical to virtual using vCenter Converter (the machine I am converting). Before I appended those entries to the I was receiving “FAILED: A system error encountered during an operation.” each time I tried running the conversion.  The error cleared up right away.

I still don’t know why this continues to be an issue. The infrastructures are setup as vanilla and as “by the book” as possible.  DNS and WINS are always setup and working properly.  Short name and FQDN resolution always works from every host and client on the network.

I suppose it isn’t the end of the world. Seems like it should be an easy thing for VMware to “fix”…then again maybe they don’t consider it to be broken.