I am having a similar problem as given.
I have tried converting to aac using iTunes and using iTunes through C&V. .
I then run create aac version on my mp3 files and when I try to bring the files into C&V I get an error.
1) What version of Chapter and Verse? If it's not version 1.4.4.0 then update.
1.4.4.0
2) What version of iTunes are you using?
9
3) What does the Audio Encoding Error Summary say?
a) What is the the "Encoding of the Files Already Selected" say? (upper highlighted area)
b) What does the "encoding error" say? (lower area)
The 1 files listed below are not AAC encoded.
Files must be AAC encoded to be added to a project.
Default AAC Encoding Settings: iTunes Plus (256 kbps)
Output Directory For Converted Files: Same Directory As Input File
Do you want to convert these files and add them to the list?
4) Since you tried manually converting the files and it didn't work, what were the settings you used for conversion?
I have customized the default settings to 256kbps, 44.100 kHz and Stereo. I turned off Use Variable... , Use high... Optimize for....