When attempting an ArcMap GeoProcessing Wizard operation, an application error occurs.
One of the layers used in the GeoProcessing operation is a shapefile that contains geometry that is not topologically consistent. An example of a topological inconsistency includes a line that overlaps itself.
There is no easy way to determine if layers are topologically consistent. The best course of action is to clean the shapefile so that it is topologically consistent.
There is a sample utility provided that cleans the geometry of shapefiles. This utility is found under: ArcGIS > Installation > ArcObjects Developer Kit > Samples > Utilities > CleanShapefile.