Hello,
Please kill all existing MS Word processes using the Task manager and then try running the same code standalone using PHP CLI mode, so you can isolate the problem.
Please note, as explained on https://www.phpdocx.com/documentation/conversion-plugin/common-problems-and-possible-errors (MS Word common problems and issues section) that using the msword method requires:
Source and target files must use absolute paths: 'C:\\folder\\source.docx' .
You need to use absolute paths in source and target options, and also note that \\ (double backslash) may be required to separate the path folders in Windows servers.
Regards.