Original User: Hornbydd
Lorna,
I'm just guessing here as I'm not at a v10 machine but I think the "clue is in the answer", I'm guessing the erase tool cannot handle the output of the feature iterator. It's probably a bug. What you could try is to put in an extra step where you export the selected polygon to it's own FeatureClass. Use the tool Select and if you want it to run as fast as possible sent it to an In_Memory workspace (read the help if you don't know what that is). This then feeds into your erase tool. Just an idea?
Duncan