This error displays when you move a wall-hosted element, and the geometry cannot regenerate properly.
Error: Can't cut instance of <family> out of wall
Issue: Revit cannot regenerate the geometry to display the moved model component.
If you move a door or a window (or other wall-hosted components) in such a way that Revit cannot regenerate the geometry properly, this message displays. This situation can occur if you move a window onto a door in a plan view. Revit cannot cut both a door instance and a window instance simultaneously. Also, the error might occur if you move a component outside a wall, by either dragging the component, or shortening the wall, such that it cannot host the component.
For example, this curved wall hosts a door. | When you change the wall this way, it can no longer host the door, and the error occurs. |
Solution: Cancel the change, or delete the instance.