Well you are flat wrong in this matter. There are different opinions about what to do with the captives but many agree that the Islamic ruler is the one who decides their fate. As the life of the prophet shows us he either executed them for their crimes or enslaved them or freed them after receiving the ransom. Alternatively he had the right to free them on condition that they convert to Islam or on condition that they teach Muslims how to read or just free them with no conditions. Also after becoming a slave the Muslims had the right to sell them or keep them or sell them back to their families as they wished and becoming Muslim wouldn't automatically free them.
67. It is not for a Prophet that he should have prisoners of war (and free them with ransom) until he had made a great slaughter (among his enemies) in the land. You desire the good of this world (i.e. the money of ransom for freeing the captives), but Allah desires (for you) the Hereafter. And Allah is All-Mighty, All-Wise.
68. Were it not a previous ordainment from Allah, a severe torment would have touched you for what you took.
69. So enjoy what you have gotten of booty in war, lawful and good, and be afraid of Allah. Certainly, Allah is Oft-Forgiving, Most Merciful.
70. O Prophet! Say to the captives that are in your hands: "If Allah knows any good in your hearts, He will give you something better than what has been taken from you, and He will forgive you, and Allah is Oft-Forgiving, Most Merciful."
71. But if they intend to betray you (O Muhammad ), they have already betrayed Allah before. So He gave (you) power over them. And Allah is All-Knower, All-Wise.
As you see in the last verses above it also recommends asking them to join Muslims but also warns against those who are just pretending.
Although there are different opinions, I would really want to see how many major scholars you can find who would agree with you that it is "obligatory" for the Islamic ruler to release the kafir captives saying that they have converted to Islam no matter what crimes they have done. So show me your sources.