ahh, you responded before me.. ill post my reply anyway lol
When you get a distorted mesh and skeleton, try rebooting skyline as this can sometimes refresh the skeleton bones.
Most FBX files will convert without problems. If you think you have a mesh which makes the FBX converter fail, then we would be happy to take a look and see if there is an actual problem with our converter.
I know you mentioned non scaling, but when you do scale a mesh using the prepare, it will break the animations. It is best to convert it to mesh and use the mesh editor to do character scaling as it rescales the skeleton as well, but may end up with stretched bones in mesh editor, simply go to the main editor and refresh your character to get correct sized skeletons and animations again
The Prepare folder option does not have individual conversions atm, all assimp accepted files will be converted included .x, .dae, .obj, .lwo. We removed the animation conversion from assimp as it still has problems and was unsuccessful most of the time, but it works great for static meshes or ordinary meshes. For characters we recommend .FBX ( default workflow. ).
I always used fragmotion even if there license activation for their free version is silly in my opinion
http://www.fragmosoft.com/. It imports .x and exports with .FBX quite accurately and stores all animation information. Make sure to sample the animations at the same rate though. I tend to use 30 frames as i think it sets it to 24 by default which is for TV.
Hope this helps