As per the pvs image wizard process, you install pvs target device setup on a machine and run image wizard to push the OS into a vhd(or vhdx in xa7.7) file. For this you need to reboot your target machine. After reboot at the conversion step, it says creating snapshot, and immediately it throws an error saying, Failed to create snapshot. Upon viewing the log file, i saw a line, which says “Failed to InitializeBackup.”

On one of the discussion forums HERE, I saw  the below points:

1. Uninstall Symantec Antivirus. If the uninstall is password protected (and you don’t know the password), see How to Uninstall Symantec Endpoint Client If Uninstall Password is in place. This allows the target device to connect to the vDisk after the Image Wizard reboot 2. Ensure that the Volume Shadow Copy and Microsoft Software Shadow Copy Provider services are set to Automatic startup and started before reboot (see CTX130702) 3. Ensure the service account that the SOAP service is running under has write permissions to the vDisk store

Second point solved my issue.