This error has been plaguing me in recent weeks when trying to upload data to ArcGIS Online through the Desktop 10.1 interface. It is clear that this is being used in ways other than described on the help file:
I'm not sure if it is related to too many layers being uploaded at once, transparency or other settings or what, but there is something in the data that triggers this error that has nothing to do with the length of the path.
The work-around is to upload the data through the online interface, but of course, that is much more time-consuming.
I've been getting the same error message when trying to publish a map service from an mxd onto ArcGIS Online. The mxd only contains a raster dataset from a GDB. I've tried shortening the path names, as is suggest in the help topic but I still can't get it to work. Any insight would be greatly appreciated.
I also received this error. It was very frustrating. I did some troubleshooting for a while trying to figure out what was going on. I decided to try switching to the Advanced license and the error disappeared. I was able to publish the tiled map service.
I figured out I had the same problem as Rob. The drive where my staging folder was located had low disk space so it wouldn't work. I changed the location of the staging folder to a drive with more space and it worked.
You can do this in desktop by clicking Customize > ArcMap options > Sharing. There it lets you choose the location of the staging folder. I think it works best when the folder path is short so I just used F:/Temp and it published from then on.