I'm having the same problem.  I downloaded a VDMK from ESXi 3.5 Update 1 and tried the took.  I tried both the regular vdmk and the -flat.vdmk, but neither work.  Disk compression is not on for the drive/folder.

 

Thierry_M:

I check files, folder, and disk are not compressed and I still got this error. Conversion works with the sample davidb indicate.

It seems the image can be in different formats. The converter needs a specific one ?

 

I too am having the "Invalid Vmdk file, please select another" issue.  No file or folder compression is used.  Any more info on this??

 

Execute the program from the same directory where the dll files are located...Do not use a shortcut.