Each report in Design Manager has a corresponding report file that ends in the extension .rpt. This error usually means that the report file is corrupt or is not a report. For example, say you make a new file text file with notepad and instead of saving it as file.txt you save it as file.rpt, now you try to run file.rpt using crystal reports, you will get this error because although file.rpt is named with the .rpt extension, is really a text file and not a report. This could also mean that due some network or hard drive issue the report file is corrupted and cannot be read. Try repairing the Design Manager Setup and running a Live Update. If the problem persists contact technical support.