Hi Richard, thanks for your wide-ranging response with lots of suggestions.
I am afraid it's a negative for most of your questions - it is an intermittent problem that cannot be pinned down on the usually suspected configuration issues.
E.g. the drive is formatted as MacOs (Journaled), has plenty of free space (2TB), directly connected via USB-A, no NAS, no Time Machine, etc. The problem occurs occasionally, with restarts in between or not, Photos Library has been rebuilt several times ..... and on and on.
Sometimes I get the error message in the subject line of this discussion, sometimes I am seeing blurry picture (thumbnail blown up to the size of my 27" iMac screen?), and this problem persists until I quit from Photos, reboot etc. - perhaps better luck next time?
That's why I asked for the actual cause of this error - and it definitely is an error! - as reported by others over a number of years, not just me. It occurs occasionally and intermittendly, and the problem has persisted over a number of different MacOS and Photos versions for years now.
I suspect it is some sort of time out problem or a race condition within the Photos software, possibly caused by a large Library held on a relatively slow external drive (Seagate OneTouch 5TB, with a 230 GB Photos Library that is showing the problem) - I don't know.
Ideally an Apple person with inside knowledge of the software would get involved and provide some suggestions, not just for my benefit but also others.
I had a more serious problem some years ago with an even larger library that became unusable. I could still see my photos, but could not edit any of them, nor could I export them. Since then I am keeping separate unedited and edited versions of my photos somewhere else, just to be safe!
Btw. I have just installed an external SSD and moved my Photos Libraries to that one. So far so good!
If there is a limitation on the size of the libraries and/or issues with the speed of the Photos database lookups and retrievals someone should tell the users!