Migration of Virtual Application Packages from ConfigMgr 2007 to 2012 that are stored on a DFS share fail

I am trying to migrate ConfigMgr 2007 Virtual Application packages that are saved on a Distributed File System (DFS), share to ConfigMgr 2012.

However, they fail and I see the following error in MIGMCTRL.log:

Failed to connect to share \\production\dfs\Virtual Applications\App Source : Error 0x80070520
Impersonation is reverted.
Set the status of the entity Virtual Application 1 to Failed.
Set the status of the job entity Virtual Application 1 to Failed.
Microsoft.ConfigurationManagement.Migration.MigrationException: Failed to connect to share \\production\dfs\Virtual Applications\App Source : Error 0x80070520

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