A couple of potential issues can cause 3DC to do this to you (and I have wrestled myself through most of them)…
* The wizard can not find the makeace utility as it is not in the default directory (perferably install MSTS in the default directory as provided by Microsoft during the installation – drive letters don’t make a difference, paths do)
* The makeace utility got damaged (try using it manually and see if you can convert the texture bitmap, if it fails you know !!!)
* The bitmap you are using for the texture file is not in the same directory as your .3DC design file (my most common mistake).
Check these and see what happens …