When you install a fresh copy of Windows XP on an NTFS partition, the default permissions on the the ALL Users folder, and its' sub-folder with inheritable permissions, are:

Administrators:   All items (including <b>Full Control</b>) are selected.
Everyone:         <b>Read & Execute</b>, <b>List Folder Contents</b>, and <b>Read</b> are selected.
Power Users:      All items except Full Control are selected.
System:           All items (including <b>Full Control</b>) are selected.
Users:            <b>Read & Execute</b>, <b>List Folder Contents</b>, and <b>Read</b> are selected.
When you run Convert.exe, the All Users folder, and its' sub-folder with inheritable permissions, only show Everyone:         All items (including <b>Full Control</b>) are selected. Convert.exe uses the %SystemRoot%\Security\Templates\Setup Security.inf file to apply security settings. Since Windows XP was installed on a FAT32 partition, the file security settings are NOT appropriate.

To workaround this behavior, reset the permissions on the All Users folder per the NTFS installation defaults.