When I've seen this happen in other processing, it is the processing extent that gets messed up. I can't tell you how it gets messed up, but you can fix it by going through the Arc Map menus of "Geoprocessing>Environments>Process Extents". Here you choose a layer that has the North/South/East/West extents that you want to make the processing work withing. Either that or put in the N/S/E/W values. The larger the extents, the more time the processing would take, so just use a shape file or raster that defines the area you are working in.
See link below my signature for more tips on using Arc Hydro.