Note: If your problem still exists after trying the steps in this article, please file a support request with VMware Support and note this KB Article ID in the problem description. For more information, see How to Submit a Support Request.
TSE Note: We see this issue if we use Products like Altiris Client Management Suite or HP Insight Manager. By disabling these products or non Microsoft products on the Physical machine which we are trying to convert, will fix the issue and the converter will be able to detect the local disks.