Here's an observation:
In the INC folder, we have the .inc, .isr, .ini, .nir and several folders/files structure belonging to the application.
When I launch the legacy converter to convert the .inc, the legacy converter stays at the point where it's Creating components for the files captured.
However, when I move the .inc, .isr, .ini and .nir to a newly created folder and launch the legacy converter, the conversion takes approx. 1 min and completes successfully.
This only happens with isolated applications and regardless of whether admin studio 3.5 is installed locally or on the server and run through teminal service.
I have included the .inc file.