Have you Windows 8/8.1 installed?
edit: Maybe this helps. Go to conversion dir, right click on arc.exe, click on Setting. Then you go to Compatibility and choose Windows 7.
Maybe it helps also if you activate "Run as Admin".
It seems that is a related problem between FreeArc and Win8, but not for all users (confusing).
https://code.google.com/p/freearc/issues/detail?id=359