Well... it is tax day...
Seriously, this is one of those "generic" error messages. I seems like you are doing things that reduce this error: local drive, target locations, etc. Make sure you have the Spatial Analyst extension turned on and make sure the layers are all in the same coordinate system.
Even recently I had some problems with the catchment polygon processing (raster to polygon). It took a PC reboot to "fix" it. I'm at a loss to understand the cause. It has been working fine lately.
The Arc Hydro processing is doing a lot. Sometimes I sense that I get an error if it has been a while since I saved or closed and restarted ArcMap. I have never heard anyone talk about this, but I wonder if the "undo" list gets too long for ArcMap to keep track of when doing all the geoprocessing and that causes a memory or other problem.
I will soon be getting v10.2.2 and so I'll be able to experience upgrade errors then. Maybe its a version issue.
Sorry I can't be of more specific help.