Well that did not take long...
I adjusted max waiting processes to 4 as per dwanthy's recommendation.
About 5 minutes into the conversion my Vista system did a hard lock up. By this I mean both Calibre and Vista stopped responding. Even ctl-alt-del is ignored. I had to cycle power to reboot.
This result is consistent with my blue screen observations on my XP system whenever I set max waiting processes greater than 2.
So in summary I am seeing a hard crash on 2 different hardware systems with 2 different operating systems.
Please advise next step. I assume I have no log to send because of hard crash, but I can send epub if someone provides destination.