Its not the solution - I've used only with IP not by DNS.
But:
I've installed Converter on VMware data-center (controlled by win 2008r2) as a client/server installation.
And I've successfully converter linux system - (I had to turn off ipsec - cause it would took ages to finish),
Still not success with W2003 SBS - but I have a different error now - I need to deploy W2003 first.
So thank you for help.
Weird that Convertion works only on vm-data-center server but, still good that it works at all so I will not comply 
.