Thanks for the responses to this thread, I was able to solve my issue. I worked around error 00278 by taking a closer look at the field map(optional) in the merge tool. You can expand the fields and find which ones may be the culprit. The field types need to match (string, text, double, long - there cannot be a combination under the same heading). In many cases, you may not need ALL the fields when you merge them. So simply "X" (delete) the fields that are causing the problem. If that is not possible...create a new field in each of the merging dataset and recalculate the values, making sure the new field has the same type of values in each dataset. Re-merge the datasets and do not use the old field (delete it from the field map). In my case the PDR (double) field had both double and text entries - I didn't need it so I deleted it. Also the County (text) field had one entry that was (short). See .jpg example.
-Good luck