When defining projection from ArcCatalog (shapefile properties) I get an error message “Failed to Alter the Spatial Reference”. If I try to do this from the “Define Projection” geoprocessing tool (ArcToolbox) I get this error insted: “Cannot create a projection file for filepath Failed to execute (DefineProjection).

I solved this problem by accesing the shapefile through a mapped drive (a.k.a. “Z:”) within ArcCatalog, rather than its \serverdrive$ pathname.

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