My assumption, without checking it, is that it is converting correctly. Your numbers are the correct numbers for drop frame. The colons makes Encore see them as nondrop frame. It converts, but that means it converts from the (your) "correct" number to an incorrect number. If they were really nondrop frame numbers, they would not match your drop frame footage.
Edit: if my assumptions are correct, you would replace the colons in your text file with semicolons - no change in numbers - and Encore would handle it correctly.