Description
The file you are using as your seed file in the Export To CAD tool is not a recognized format as a CAD file. A seed file is an existing CAD drawing whose contents, document, and layer properties will be used for all new output CAD files.
Solution
You can use the DGN seed files provided by Esri or make your own seed files. To make your own seed file, you will have to use the native CAD package.