First file fails (error message displayed is "Unknown error", second file converts OK, 3rd fails, 4th OK, 5th fails, 6&7 OK, 8th fails..
By about the 20th file, 5 are successfully converted in a row and then by file 30, no more failures!
So it would seem that there is not really a problem with actually reading/processing the .3fr file content. Instead looks like some form of memory or other issue in the code??
If I open the DNG file in PS CS3 and save pretty much immediately, saving works. If I do almost any processing, the "Save as" freezes PS3 before the file/directory selection dialog starts. Only forcefully stopping Photoshop helps. Looks like there is something in the "Save as" dialogue that does not check for exceeding max memory allocated to Photoshop or similar?