I ran into this with a four-year-old Dell Inspiron that I was trying to upgrade. It was a royal nuisance because, until I was able to fix it, every time I booted it, it went into convert and crashed. SP2 may have fixed this for some people, but SP4 -- which supposedly incorporates SP2 -- didn't work for me.
what I ended up doing was using Partition Magic 8 (apparently 7 would also have worked) to split the 40G drive into two 20G drives, telling NT to convert the filesystem on the primary partition, then going back into PM and telling it to attach the remaining unallocated space. Bingo, 40G NTFS partition, but neither quick, cheap -- PM was $70 as a download -- nor intuitive. YMMV.
