Run a chkdsk on the source disk. If there are errors then chkdsk /f on the source and re run converter.
You should also check to see that you don't have errors on the ESXi datastore. Try ALT + F12 from the ESXi console as you start the VM
Also look through the vmware.log files for the VM.
to add on to this ...
What controller did you select ?
I guess the original machine used IDE ?
If you configure the VM to use IDE you may get this result.
VMware can only handle BUSLOGIC (vmscsi) for XP source machines.
The IDE and LSIlogic options are a bluff.
This error may also mean that the partition is not activated - or that you try to boot from a non-bootable floppy image
I had the same problem converting an XP image from ESX4 to another ESX4. As DSTAVERT mentioned, when I converted using Buslogic SCSI controller vs. "same as source" (IDE), it worked fine!