When you are running the tool, are you running it from ArcMap, ArcCatalog, or python? I would think that if you can see the file in ArcMap and select it from the dropdown then it would work. Also if you can path to it, then it should work as well. The confusing part in your statement was that you said lidar points was the name you gave it to output to, it looks as if it is looking for that as the las file, since it says table. Have you tried to run it with a different name? What version is your geodatabase? Have you tried a shapefile output? Since you are using multipoint, you may decide to put it in a new feature dataset if you are looking to create a terrain. The only other way I have seen a similar error is when the information in the las file will not fit in the coordinate system chosen.
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