I have more information about this issue.
It seems that in Windows 2012 R2, the uninstall string for vmware tools has changed. In 2012 and below - the string is: MsiExec.exe /X{648D3C6F-E33E-4A1B-BB16-01509F48FB8F}, but in 2012 R2, the string is: MsiExec.exe /X{46488CDF-4FE8-442A-8E8B-AA5615598FCF}. I will be looking at the powershell code today to see if I can address this, but for now - what is happening is that the conversion is timing out because the vmware tools uninstall is not completing properly.