I just ran (or tried to) an offline P2V of a Dell PowerEdge T700 with SCVMM 2012 SP1. It uses the new and improved Server 2012-based WinPE for the recommended offline conversion of a domain controller. I too ended up with the error above. The cause is that
the processor, a 2.8GHz P4 is no compatible with the 64 bit WinPE used by SCVMM 2012 SP1. So it failed to boot into WinPE. It also failed to remove itself and I was forced to go Googling for a solution, which led me here. I booted from a Server 2003 R2 CD
(the T700 does not have DVD drive), loaded the CERC/SATA driver for the disk controller, and renamed the bootmgr and boot.wim files mentioned above. I also had the perm issue with the boot directory, but left it as it was. The server booted, thankfully,
back into its native OS.
Now, having survived this scare, but also have wasted HOURS of my time, I'm left wondering why the wizards at MS didn't bother to check the processor architecture during the preflight P2V check that SCVMM does, much less leave an option for an offline P2V
of physical boxes with 32 bit processors.
It's an SBS 2003 server, so it's running Exchange and AD, and MS says not to run online conversions of boxes like this.
So how the heck are we supposed to convert this older physical boxes to VMs???