Beginning with Sound Designer 2.7, you can select a location for SoundDesigner to create temp files used for Undo, clipboard, and "Use BackupFiles". Before this time, temp file locations were always assigned to the drive and folder from which Sound Designer was launched. However, if the temp file folder or drive is removed, Sound Designer does not know where to put temp files and posts the above error. To alleviate the problem, reassign your temp file location, quit and relaunch Sound Designer, and try the editing function again.