I use Export To Cad GP tool in ArcObjects 9.3.1 to export a set of shape files that are clipped from GDB. For big areas exports ExportTOCAD process fails in between stating "ERROR 000508: Unable to create <dwg file>". as reported in a log file.
I am using a seed file as one of the export parameters. Remember there is no doubt of permission issue because the process has already exported few layers and I have checked the feature class for features and there are available features in it.
One more thing I would like to mention that it being a long process I leave the machine locked and GDB layers get disconnected after a set time out but the process is running on the shape files produced.
The issue might be specific to a particular Shape file. Try to find the problematic Shape file and import it to a File Geodatabase and check for any Geometry errors using Check Geometry tool. Also run the Repair Geometry, export it to Shape File and check how it works in Export To Cad GP tool.