VMWare's Converter utility (which comes integrated into Workstation 6) is somewhat limited in the way it works. The 'failed to query source for information' error occurs in two cases that I have seen. 1 - When trying to convert a Vista image (which is not yet supported by the converter), and 2 - when the image file being converted is not by itself in its own folder. For some reason, the conversion will not work unless the ShadowProtect image has its own folder with no other files. Also, if you are attempting to convert a chain with incrementals, first use the Backup Image Tool in ShadowProtect to collapse the chain into a single full backup (and put it in its own folder for conversion).
The converter seems to work well enough with the above criteria, but there is still always the solid option of using the ShadowProtect Recovery CD to restore to the VM in the normal (and much less buggy) way.