I revisited the issue again today after putting it on hold and this is what I found out.
Still received the invalid index error but realized the feature being digitized was being put into a temp in-memory FILE geodatabase. I had set the schema for my feature set's variable to a PERSONAL geodatabase and the append target was to a PERSONAL geodatabase. Don't know if it makes a difference mixing FILE and PERSONAL geodatabase processes, but I didn't get the error when I based the feature set schema and output on a shapefile or FILE geodatabase feature class. So I created a new FILE geodatabase and imported the feature classes from the personal geodatabase. Now I have to deal with the loss the table editing feature. With the old working model, after a feature was digitized the user was able to add attribute values to the fields with the help of domains that I had set up for the feature class. While I can digitize a feature now, I have to edit the table outside of the tool dialog and I don't have the field dropdown lists with the domain values. The table editing feature of the old model is needed to keep data entry consistent among multiple users, but I'll save that for another post.
Charlotte