This error occurrs when I have set up a menu in Encore using the Adobe Menu Templates and then attempt to send it to Photoshop directly through Encore by doing a right click and choosing the "Edit Menu in Photoshop" option. I have found a work around by locating the Photoshop file in the Encore sourses folder and opening that directly in Photoshop. That keeps things moving but it isn't the cleanest way to move between aps.
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