This is correct. When you have a balance in any traditional IRA, including a rollover from a 401(k), your conversion becomes subject to the pro-rata rules and a portion becomes taxable.
The percentage of the Roth conversion that is taxable depends on the balance in the rollover IRA. If it was a fairly large rollover, most of the conversion will be taxable.
There isn't any way to correct this if you've already made the conversion for this year, but for future years you could potentially avoid the pro-rata rule by either converting all of your Traditional IRA (and paying the tax on this conversion) or by doing a "reverse" rollover and moving the traditional funds back to a 401(k) plan with a new employer - if this applies to you and the plan allows for it.
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