ASP.NET 2.0 beta 2 - Problem w/Conversion Wizard

[VB Programmer]

Simple ASP.NET 1 site. Opened solution in beta 2 of 2.0. Ran thru
conversion wizard and it states:

"Conversion Complete. There were some errors during conversion."

I view the conversion log and for the project there is 1 error...

http://localhost/Watersmark/
Conversion Issues - http://localhost/Watersmark/:
ERROR: Failed to backup website http://localhost/Watersmark/

I just got a new dev machine, so I do NOT have a localhost subdir. The
sln/suo files are both in a C:\work-related\Websites\MyWebsite dir, rather
than c:\inetpub\wwwroot\MyWebsite, as the original website was in.

Is this a problem? Any ideas?

The Solution Explorer doesn't show any of the files converted.

Thanks!