I am trying to do the same but with no success only that failure is at 99% 
Message is:
"GrubInstaller::InstallGrub: /usr/lib/vmware-converter/installGrub.sh failed with return code: 255, and message:
--> mount: mounting none on /mnt/p2v-src-root/proc failed: No such file or directory
--> Unable to mount /proc to /mnt/p2v-src-root/proc
-->
The VM is created but it fails to boot as you probably understant. I load SLES 10 SP4 DVD and tried to make a repair but it cannot find /root or /boot
I also tried in grub:
grub> root (hd0,1)
grub> setup (hd0) with no success.
i have SLES 10 SP4, 2.6.16.60-0.85.1-smp , GNU GRUB version 0.97. Could a GRUB update solve it? I dont want to miss anything from my physical machine.