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This error can occur when converting an ArcSDE feature class to a coverage using the Geodatabase to Coverage tool as a Windows Authenticated user by way of Microsoft SQL Server:
"Reading Features..... Cracking Features... Invalid Topology [No_New_coverage]. Failed to execute (FeatureclassToCoverage_10)"
The user who is connected to ArcSDE by way of Windows Authentication for Microsoft SQL Server is not an administrator on the Client machine, and is not able to write temporary files to the TEMP directory.
The following has been a successful solution for some, but not all of our users.
Grant the Windows login account Administrative privileges on the client machine. If this is not an option, find the location where the temporary files are being written and grant the user WRITE privileges on that folder.
If not successful, please contact our Technical Support department for further suggestions.