I ran a successful conversion from a command prompt by navigating to the source file folder before launching 'todvrms.exe'. Using your example files, I'd suggest trying --
C:
cd \
"N:\Installations\Vista\WMC\todvrms\todvrms.exe" .\test.wtv .\test.dvr-ms
(note the .\ syntax to specify the current folder explicitly)
I have also found you can only convert wtv files on the system they were first written. If you copy them to another system and try to convert them locally, it fails. I guess there's some Protected BDA and/or DRM nonsense in the wtv files. In any event, I know there's a lot of rubbish present as my output dvr-ms files are over 40% smaller in size !!
Many thanks to the author of this tool, BTW