1. A system for verifying virtual machine (VM) data files, comprising: a data conversion engine configured to on-demand translate selected portions of an image level backup file without fully extracting contents of the image level backup, and to represent contents of selected portions of the image level backup to a hypervisor in a native format; and an operating system (OS)/application verification module, wherein the OS/application verification module is configured to perform automated testing of functionality of an OS or an application using backup testing parameters.