This is likely a simple solution, but I have been banging my head on the screen long enough that I need to reach out.
(This is a very simple model I'll end up using on a substantially larger feature class.) For this test, the goal is to export each of the 6 features as their own individual feature class into a gdb. There are no special characters in the NAME field as you can see in the screenshot, but it still throws the invalid characters error. When I replace "%NAME%" with "Blah_%n%" it exports properly. Any hints?