I tried this out, and maybe I am just not using it right, but.. chose my steam folder to link to, in my case, a virtual S: drive - then told steam to install to a folder I named there, leading to the somewhat redundant path of "S:\Final Fantasy VII\steamapps\common\FINAL FANTASY VII", but the converter fails to recognize my install.. :/
EDIT: skip the VSubst, it's annoying that Steam currently forces it to be done in this manner, but you can simply create a new library folder:
"Head to Settings > Downloads > Steam Library Folders and click “Add Library Folder”. Navigate to your new Steam library folder and create a new folder within it called steamapps . Then, create a folder in steamapps called common . Head to your current Steam folder and find the folder for the game you want to move."
For me, I already had the virtual drive set up and installed as indicated above to S:\~, as per Steam's own instructions, I deleted everything in that location except Steam.exe, my game folder, (which was erroneously named and filed redundantly, so I cut and paste into--->) steam apps, and userdata. I made a new library folder directly at C:\ and pasted and organized the folders there, updated Steam, and all was well.
Here's Steam's own instructions: https://support.steampowered.com/kb_article.php?ref=7418-YUBN-8129
It's the second section labeled "How do I move my existing Steam Installation?". Worked for me, though was a pain in the ass, lol.