The core node you are trying to access is permanently deleted.
As Joe figured out, it sounds like you have data with Z values of either 0 or below the surface of the earth.
At the 10.1 release we're added a parameter to the tool to "clamp features to the ground" - basically it will override your Zvalues.
For now, you could try:
Run the Create Feature Class tool (make sure to keep the Has Z setting DISABLED)
Run Copy Features tool with your original feature class and insert into the new feature class.
Run Layer to KML on the new featureclass and see how that behaves inside your KML client.
I'm sure someone will jump in here and correct me if I'm wrong - but it might be that Google maps cannot support icons inside a KMZ. Its a simple web client, where Google earth and ArcGIS Explorer are full clients.
From what I've read, Google Maps supports Icons inside of KML. (all the doc I read on Maps explains KML, not KMZ specifically). https://developers.google.com/kml/documentation/kmlelementsinmaps
KML icon tags point to files on the internet. (http://.../myIcon.png). With a KMZ file the icons and images get embedded inside. I haven't read one way or the other if Maps can or cannot use icons or files inside a KMZ.
Sorry, I realize this doesn't give you an answer. Until I can read something or see a KMZ with an icon that Maps can use, Im not sure its possible.
No this is at least a starting place to start looking. Before I was really lost on where to look to solve the issue. I am just surprised that no one else has had this issue.
Thanks for looking into it and taking the time!
Cheers,
Natasha