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One other client site reported this issue a little over one year ago. Same scenario as you; some users were unaffected while other users encountered the error. The same user could execute PLTS GDB to Shape on one machine and not on another. I think all machines were the same OS.
We recommended that the user rename the ESRI folder within the user profile, but, that did not work. User was not willing to uninstall and re-install the software. User would not give us access to their machine. We could not reproduce the issue internally. The user stated that he resolved the issue by creating a new Windows user.
I have creatd a new user account on machine and still have same error. Noting I try (except reinstallation) will correct this issue. Now I have users having this problem out of the blue. Utility worked fine 2 months ago and now it errors out. Could a developer look and see what possible scenarios could cause this error window to pop up?? Would be nice to have a list of things to look for. The Error message is a bit vague and give sme nothing to go on.