Lost connection to remote machine while deploying UFAD Error

I have just installed VM Converter build 33128 onto a VM running on ESX 3.0.1 with Windows 2003 R2 guest OS running on it.

I am trying as a test to convert my remote XP desktop machine which is configured as a workgroup. I am providing the IP address and the user name/passwd of a local admin account.

Everytime I try to import the Physical machine using the IP address I receive the error message "Lost connection to remote machine while deploying UFAD"

If I use the hostname of the remote machine then I receive an error "Connection to remote machine refused due to bad credentials"

I have disabled WIndows Firewall from the VM running the VM converter and also on the remote XP workstation.

I am wondering whether the remote machine needs to be in the same domain as the machine running the VM converter?

Any pointers please?

MP