When I click the button to convert the book, my firewall (ZoneAlarm) tells me Calibre (or, more specifically calibre-parallel.exe) wants to access the internet. If I say "no", Calibre hangs and will not create the book.
If I turn on ZoneAlarm's Internet Lock before clicking on the convert book button, Calibre hangs and will not create the book.
If I disconnect my computer from the internet, and when the firewall asks if Calibre can connect to the internet, I tell it yes, it will try to connect a few times, then convert the book.
It wants to go the web for something. ZoneAlarm says it's trying to go to 127.0.0.1:Port 10013.
[a little later]
Okay, with a little digging, I see that 127.0.0.1 is a "loopback" test back to my own computer. But why does Calibre do that? Is it trying to see if my Sony Reader is attached to the computer?