Custom material library-appearance

We recently installed SW 2010 and have noticed that some areas of our Custom material library are no longer working. Basically, we have been using our Custom library for parts not in the default SolidWorks Materials library since late 2008 with no issues. In 2010, when in a part, we are attempting to change the appearance (texture) of one of our materials for a select set of parts.

When in a part, we RMB on material->Edit Material->Choose the Material we wan to modify->Appearance-> SolidWorks Textures->then choose our selected texture. At this point we get the error shown in the attachment. Any help on why this doesn't work would be great.  Aslo, We have open and saved our templates in 2010 format as well.

thanks,

Luke

SolidworksParts And Features