SAP PP Planned Order Conversion to Process Orders

We are facing problems when converting planned orders to process orders. During conversion when BOM is re-exploded it is not using the same production version as specified in the planned order instead it defaults to the first one it sees.

I need to know if I am missing any settings anywhere.....

First ensure that setting in the material master for BOM explosion is "Selection thru prod version".

Then Pls check the validity periods of the new production version.

e.g
Prod Ver Val frm val to No lot size variation
0001 01.01.2007 31.12.9999
0002 01.01.2007 31.01.2007
or
0001 01.01.2007 31.12.9999
0002 01.01.2007 31.12.2007

Then in both the cases system will always pick prod ver 0001 default (Longer validity period). If not the case then
Check for lot size variation (if lot size dependent.)

Further if you are not able to select the req prod Ver then you can lock the earlier prod version(if it is not in use).

To avoid this prob in future.... always use "Valid to date" either in limits (31.12.2007) or without limit (31.12.9999) for all prod version of a material.

When we have to go for Planned order conversion to Process order, it is used in manufacturing industry or process industry, when exactly we use process orders?

It is used for process industries.