"convert" is a part of the ImageMagick suite of programs and is used by ochiba to generate thumbnails. More information on ImageMagick can be found here:
As far as installing for use by ochiba - you need to have "convert" installed somewhere on the server and the configuration setting CONVERT (should be around line 121 in conf.php) be set to the path and parameters for the convert command. On Linux systems, the stock settings should do. If you are having problems and you are on a Linux (or other Un*x-like) system, then it may be the path that needs to be changed (for example, rather than /usr/bin/convert, it maybe /usr/local/bin/convert - ask your sysadmin if you're not sure how to locate it). It may also be possible to install it local to your account and adjust the path accordingly.
If you are on a Windows server - I'm not sure what the specific details are, but the general idea described above should apply.