"invalid index grid size" error when trying to digitize using feature set variable

Hi,
I'm having a hard time understanding why I'm getting the attached error when using a feature set variable. I created the attached model in ArcGIS 10.1, sp1.

I want the user to digitize a new polygon and have it appended to an existing feature class called "proj_1600loc_poly" which has a feature template for editing. In the model, the new polygon variable is a feature set data type with the schema imported from an existing dataset within the project ("proj_1600loc_poly") or from its source location. When I open the model as a tool from ArcToolbox, I see "Model:: New Project" in the input parameter field and underneath the field I see the correct symbology needed to digitize the polygon. I digitize a polygon, but get the attached error when it tries to save (or append?) the new polygon. I tried to change the Output Spatial Grid environment settings while in the tool's dialog and then within the model in model builder, but I get the same error.

I didn't have this issue with the model when it was used in ArcGIS 9.3.1. I recreated the 9.3.1 model for 10.1. I don't know what other settings to consider. I've looked at this common errors link http://help.arcgis.com/en/arcgisdesk...0012000000.htm and the help section on interactive controls.

Thanks, Charlotte

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