It did convert but failed to boot. Instead of using the Windows Repair process, which I assume would also reset all registry entries and I'd have to reinstall all applications (I don't want to do that)...
So I ran GoVirtual which keeps all application registry entries and just replaces... uh... DLL's? Anyway it now boots and runs.
Unfortunately it's much, much slower than a freshly installed XP .vdi would be. I realize a new install is always faster, but this is bad, 5 minute boot.
Oh well... I've got my files.