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I just had this problem. I got round it by starting a new project, importing the old project into it, creating a new timeline then cutting the clips from the problem timeline and pasting them into my new timeline, then deleting the old timeline. Seems to have fixed the problem for me, and of course you're not destroying the original project - just in case!
2 Months on, and i've still got the same error. Tried above solution and it worked!
Thanks S W Reid
A few days ago I reformatted hard drive, installed windows xp and opened a standard project to incorporate new info-2 camera two tapes each. It was fine for the two days and just now i get that same message after multi cam for a two hour vid just as i was finishing.
Have you solved the problem. My email is email@example.com for direct contact.