Ken,
The error messages are usually not helpful to me. They seem to provide information only the ESRI developers can understand.
After you get the error, try refreshing your ArcCatalog folder to see if it is created anyway. It could be there. If it is, you will likely need to set the Spatial Reference and it is likely useful.
Are your project directories on a network or your local PC? I recently found that moving the project onto my local PC eliminated most of the crashes and errors. I make sure the under File>Map Document Properties I click the box for "Store relative pathnames..." This lets me move the project back to the network server without disconnecting the layers.
Mark
