Description
The tool could not transform the Candidate Features parameter value into the output coordinate system defined by the current environment settings. If you are trying to send the output to a feature dataset, all feature classes must share a common coordinate system and the tool could not transform the Candidate Features parameter value into the required output coordinate system defined by the feature dataset.
Solution
Consider reprojecting the Candidate Features parameter value or, if that is not possible, sending the output to a different location.