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Using a geodatabase feature class or table as input to a geoprocessing operation returns a "dataset does not exist" error. Yet the data clearly exists. Also, attempting to drag and drop the dataset onto a tool parameter does nothing, the parameter does not get updated.
This is caused by an invalid subtype on the dataset.
Go to the feature class properties, click the Subtypes tab and re-enter the default subtype code. If the default is 0, click the cell with 0 and re-enter that same value. Apply the change by clicking OK.