Let's try simplifying it a little further... Try this:
else
Since the Hour function returns a number and you're using a 24-hour time, you don't need to convert it back to Time.
If that doesn't work, try breaking it down into pieces in multiple formulas to determine what the data actually looks like - for example, make each of these lines a separate formula and put them on your report just to see what the values are:
From there, you should be able to determine what's wrong with your formula.
-Dell