Question: Is it possible to convert existing process instructions for PI Sheets to XSteps?

Answer: No

XSteps are master data and process instructions are maintained in customizing. There is no process or report which automatically creates XSteps in the repository. You could try to manually copy the process instructions in customizing and paste them in the process instruction tab of an Step element. It might work – or not. And there would be a good deal of rework because XSteps handle a lot of data transfer with parameters and process instructions use variables which work differently.

I generally recommend to use this as an opportunity to do a general rework of your manufacturing instructions and gradually move them to XSteps. It is possible to make the switch from one master recipe to another so there is no need for a big bang to convert everything at the same time.