Ran into this today. I’m running a 2 X’s 2.4 GHz Quad-Core Intel, 8 gigs of ram, running FCP 7.0.3 with a Kona 3 on OS 10.6.5. I tried everything I could think of to get this to clear; new sequence, new project, throwing away media. Finally, I followed these instructions: (https://www.larryjordan.biz/articles/lj_trouble.html)
for trashing all the prefs and bingo was his name-o, it’s back to working fine. Right before it went bad, I tried to output an uncompressed HD 8bit sequence at 29.97fps onto an HDCAM tape. The definition of simple. For some reason, Final Cut wouldn’t recognize the deck and when I restarted, General 88 appeared. It did not want to work at all until I trashed the prefs. All better now though.