I have the sane configuration and the same errore #2 when I try to create a new thumbnail grabbing from video.
I guess it happens because the video is stored in remote storage and the grabbing procedure can't proceed if the video is not in locale storage.
Please set in your policy "import remote source for convert" then try to reconvert a flavor and while the system is busy to reconvert try to create the thumnail grabbing the frame from video.