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Need help with validation rule formula

I'm trying to create asimple validation rule such that when an user is trying ot convert lead and enters "System" in the the "Record Owner" file, it should display error. Formula I'm using is  - >  Owner:User.LastName='System'
System is an integration user and does not have first name in the user profile.
1. I'm not sure why the formula is not working . Joshn Smith is valid user .
2. Why does the error keeps displaying below the "convert" field when I mentioned in the validation rule to display the erorr next to lead owner field. (screenshot below)

User-added image

Hi ,

Please try to have the condition as below and see if this solves the issue. 
If you feel this answer helps then please mark it as a solution.
Amit - I tried your suggestion. Issues #1 & #2 mentioned in my original post still exist. Not sure what is going on
Please recheck you validation Rule "Owner:User.LastName != 'System' '' 
Did you put equal to or not equal to.