The image is not a multiple of a power of 2 and to my knowledge WC3 only axcepts images with a resolution of 32,64,128,256,512,1024 or 2048 pixels in any demension (images need not be square). If the converter auto generates bitmaps (yes, blp stores all bitmap levels in it) it would probably error due to there being no whole number devisor and as such the stream is never generated that is to be written. My adivse is to change the resolution of the image to 1024*1024 (eithor adding a frame or stretching in some form) and trying again. If the result is too large up the jpeg compression the converter is set to use or try reducing it to 512*512 (1/4 the pixels and thus 1/4 the size). Adding a frame of solid colour would be the most space friendly due to there being no high frequency data to store.
Also try out other convereters. Frankly I had to try 3-4 before I found a suitable one. Many lack key features like pallet bitmap .blp while others are unwildly or produce poor quality. Make sure you run them as an administrator (after virus scanning) as it might also fail to write a fiile if the application is unable to get write permission for it.