I have been searching for this error, bu thave found nothing definite about it. Sorry if this is an unnecessary new thread. We have a 192-page magazine we have exported the art only as PDF X-1A with no downsampling, to make one art layer for translated versions, allowing for black plate change for each language. When attempting to place this as the background art for the language versions of the mag, we get "A file I/O error has occurred." We have tried optimizing the file (still will not allow placement into the file) re-PDFed it a few times, worked locally on desktop instead of network. Finally did a workaround of simply dividing the exorted PDF in half and using two links for the art layer. That worked. (The size of the exported PDF is about 2.4GB -- is it simply a file size issue?.) ID CS5, Mac OS 10.6.7, Quad, 2.88GHz, 8GB RAM.
It sounds like a bug or limitation. Are you using 7.0.4? 2.4GB is a bit big for a PDF, what's the origin of the artwork and how big was it before being placed in InDesign [or do I misunderstand you?]