How can I convert an item of clothing from a Character to Dynamic clothing..? Can it be done..? Poser 12

You would be better off using the OBJ file to transition to Dynamic Clothing.  However, depending on how the mesh was created and assembled, the clothing may not be suitable for the Cloth Room without further mesh welding.  Pockets, buttons, loops, etc. may not conform or fall off during cloth animation, and double-sided mesh never behaves when converted to dynamic clothing.

It depends on the clothing and how it was built. If there are a lot of detached decorations, then it may end up being more trouble than it's worth. The easiest way is to take the garment into the fitting room and spawn a prop. You'll need a second figure in the scene to stand in as the goal but since you aren't doing any fitting, it can be any figure.

You can also export the clothing as an obj and re-import it. I prefer the fitting room because it retains shaders and doesn't leave a file on my hard drive that I have to remove later.

Sometimes the body part aren't welded and the clothing will fall apart in the cloth room. If you want to use the fitting room method, you can try converting the clothing to simple bones single skin (figures>skinning method) but most likely you will have to take the clothing into a modeler and weld it there.

I've used a d-form piece of cloth, to be used in Daz's Studio, as a dynamic cloth in Poser by simply exporting it as OBJ and importing as is in Poser.
So I think that you could do the same trick directly in Poser.

As soon as  you select a prop in Poser's Cloth Room, it becomes something dynamic. This done, you will probably have to define what's choreographed, what's soft/rigid decorated, depending on the cloth's shape itself, for example if it has a belt.

Thanks everyone, appreciate the responses...

The fastest way is Ken's script:

Figure to Prop for Poser 12 Poser Python Scripts Ken1171_Designs (renderosity.com)

 Cheapest way is FigToProp: https://www.renderosity.com/freestuff/items/86003/fig-to-prop

will that work in later versions of Poser without hoop jumping? That was written with a previous version of python, which is why I didn't suggest it.

I would see no reason why it would not work. It is plain Python code, not compiled. I cannot test a.t.m. but I downloaded and reviewed and as far as I can see there's nothing in there that would not be palatable by the present versions of Poser. If there is let me know.

For all purposes and intentions: many uncompiled older scripts just work on P12 and P13 if they are properly coded. It does not hurt to try.

I just tested it and it does work in Poser 13.  Elegantly simple.

Or manually... any figure, useful for posed figure props for instance

File:Import:Wavefront OBJ... all options unchecked

File:Export:Wavefront OBJ...

File:Import:Wavefront OBJ. All options unchecked EXCEPT Weld Identical Vertices. Final prop.

UVs will be maintained. Usemtl groups maintained (It's not necessary to check Preserve Existing Material Names)

The resulting prop will have no poly groups, the prior existing body part groups have been dumped. A single group is easily added by either opening the OBJ in a text editor and adding g NAME directly before the facet (f) blocks (usually the g will be in place but must be named as desired)...

Also note that the winding order has been altered, caveat.

Or if you're sqeamish about editing OBJ files just use the Group Editor

New Group...

Add All