I managed to open the file successfully using the 'File'> 'Libraries & Objects'> 'Open Object' method, and convert it to a library part with no errors.
The 'trick' was in the dwg translator. Under the 'Open Extras' section there is a checkbox labelled 'Convert to GDL Object'. With this ticked and the correct unit in 'Drawing Unit' selected (inches seemed to work for me) it created a library part.
Be aware that it has 186,000 polygons and does take some time to convert and save. It even crashed ArchiCAD once when converting, but I think the machine ran out of memory (32bit fail!
Also note the resulting library part is nearly 39MB in size!
Hope that helps.