I agree that this is unacceptable. Today I am having the exact same error trying to create an address locator as well. My centerline file is also in a network dataset in SDE (I have sysadmin rights to the server and SDE). I attempted everything mentioned within the threads; storing it outside of the dataset (which is where I want it anyway), renaming it to keep it short, etc. Nothing worked until I imported the feature class outside of the dataset so it was a stand alone feature class. There should not be any reason as to why a user needs to maintain an extremely important dataset in two places due to a bug.
For the record, I am on AGD 10.0, SP3, Windows XP, using direct connect.