Create your custom post type and then try this. (BACKUP FIRST AS THIS IS UNTESTED).
<?php
// Get all posts in category "5"
$news_posts = get_posts(
array(
'category' => 5
)
);
// Loop through them
foreach($news_posts as $p):
// Update the post type
wp_update_post(
array(
'ID' => $p->ID,
'post_type' => 'news'
);
);
// Delete term relationships for the post
wp_delete_object_term_relationships( $p->ID, 'post_tag' );
wp_delete_object_term_relationships( $p->ID, 'category' );
endforeach;
?>