Go to Environment Settings (in tool's dialog box) > Parallel Processing. Define the parallel processing factor as 0 (zero). Run the tool.
If the issue persists, check the following.
What version of ArcMap are you using, and what level (Basic/Standard/Advanced)?
What is your input DEM data format? What is its size? Is the input Raster stored in a local drive (preferable) or on a network?
Could you try saving the output (as a *.tif file) in a simple workspace path, e.g. C:\Project\Data\FlowDir.tif ?
Ensure Background Processing is turned off (Geoprocessing > Geoprocessing Options).

Think Location