Lothar,
Thanks for responding. Below are my answers to your questions.
1. I am using ACAD LT 2006.
1a. Are you talking about other applications that run on top of AutoCAD? If so, then no. I am running stand-alone.
2. The object was blocked and sent to me by a customer.
3. This is the only drawing with this error.
4. I have not tried the audit/recover.
Thanks