I experienced this error today when trying to use vCenter Converter to P2V my Windows Home Server 2011 server to my vSphere cluster, I was getting concerned because the host I was trying to P2V was definitely powered on and working (it’s the host that has my vCenter server on and I was connected to it via the vSphere client).
A little further investigation led me to discover that the vCenter Converter plugin actually looks at the entire cluster state and that’s where the problem lay, you see I have three hosts in my vSphere cluster, of the three only one is online and that’s down to DPM being used (why have powered on hosts if you don’t actually need to use them??).
The resolution to the error message?
Disable Power Management (mine was set to manual as above), once disabled you’re going to have to power on the hosts that are in standby mode, once those servers are online you can then proceed with the P2V.