In VMware Convertor (skipping the initial)
- after you select "Destination Location" and click "Next"
- You get into "Options" on the right-side you click "Edit" in "Data to copy" section
- There you see Virtual Disk type as "Thick" and "Thin" select "Thin" and make changes to Datastore if required.
- Click "Next" review the conversion parameter and "Finish"
I also attached the print screen hoping it helps
