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Running the DEM to GRID tool at 8.x or the DEM to Raster tool at 9.0 will produce the following error message:
"Invalid Entry. Spaces are not Allowed in the Path Name."
The path to the DEM contains a space in the name. Because the DEM to GRID tool uses the ArcINFO Workstation DEMLATTICE command, spaces are not permitted. Spaces are not permitted at all in ArcInfo Workstation path names.
Move the DEM to a location that does not contain spaces.