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When using the ArcMap GeoProcessing Wizard and outputting to an ArcSDE feature class, a message box may appear titled "Saving Data" with the message "Output name is not valid".
This error message appears if:
1) You save GeoProcessing output to an ArcSDE feature class contained within a featuredataset.
2) This featuredataset is the current Save Data location. (The Save Data location is the last location to/from which you added or saved data.)
3) You edit the default output feature class name from the GeoProcessing Wizard (e.g., Dissolve_Output.shp).
To avoid this error message, don't modify the default output feature class name directly from the GeoProcessing Wizard.
a) Click the Browse button.
b) Change the feature class name in the Saving Data dialog box.