ok i am 100% sure the ini folders are in the right location
C:\Program Files\Bethesda softworks\Morrowind
C:\bethesda softworks\Oblivion
so dont say that
i go to load the esp converter and it sayscannot find morrowind.esm
or any of them
i am running windows 7
i also have had this problem. i read the read me over and over again. not in the best english but as far as i know you just change the path names to the file folders. ive tried other things to and still it says the esm 's are missing. i would love some help here as im anxiously awaiting to see this.
I'm sorry to say this, but the converter hardly works on windows 7. It's not even tested on windows 7. It only works on xp and somewhat (with tweaks) vista. I don't know much about windows 7 yet...... Because I don't even have it yet. XD If you'll give the program time to evolve then maybe it will work. And also if you ask the Owner of this site, maybe he will help you. Just give him an instant message. 
I had the same issue but im on vista but try it any ways. the converter gave me they same message until i put a forward slash or was it back ??? at the end of the URL but try it i dont know if it was just a fluke but it worked for me
the esp_cov says that
Morrowind.esm does not exist
Tribunal.esm does not exist
bloodmoon.esm does not exist
Wtf do i do? Windows vista (64bit) Would like help as soon as possible!!
I have Windows 7 and it worked fine for me, just ensure that you're running it as an admin.
now it says
Welcome in Morrowind to Oblivion mod translator v0.98
Parsing Morrowind.esm
Parsing Tribunal.esm
Parsing Bloodmoon.esm
can't create C:\Program Files (x86)\Bethesda Softworks\Oblivion\Data\Morrowind_o
b.cnv!
Press enter...
are you sure that you have the file locations set right? Also, if there isn't enough free space on your hard drive it won't work.