Error Message: "Run failed because ArcGIS LYR filename.lyr in view unknown and group unknown does not appear to be valid or might be empty. Make sure that any data sources referenced by it exists."

Symptom/Problem:

Attempting to open an ArcGIS LYR file results in the error:

Run failed because ArcGIS LYR filename.lyr in view unknown and group unknown does not appear to be valid or might be empty. Make sure that any data sources referenced by it exists.

Environment:

Oasis montaj and Target

Solution:

1. Open the LYR in a new project in ArcMap.
2. Re-establish the link to the Shapefile by clicking on the red exclamation mark in the table of contents > browse to and select the Shapefile > click Add on the Set Data Source dialog.
3. File menu > Document Properties > Data Source Options.
4. Activate both Store relative path names to data sources and Make relative paths the default for new map documents I create.
5. Click OK > OK.
6. Right-click on the LYR in the table of contents > Save as Layer File.
   You can save the file using the same name and replace the existing file or you can create a new LYR file.
7. Close ArcMap.
   You will now be able to import this LYR into Oasis montaj or Target without getting an error.

Root Cause:

This error occurs because the LYR was not saved using relative path names causing the link to the Shapefile to be broken.