I have a homestead sim that gets this same message almost daily, especially after I have terraformed or re-drawn parcels. Found that using mesh buildings and landscape items also affects this. At that point, I am unable to drag anything from my inventory onto the ground and have to restart the sim. Recently my sim was moved from SL server to RC Magnum in hopes of resolving lag, this particular problem, and constant script errors. The problem still exists and is compounded by even more script errors. It is not a problem that I alone experience - anyone on the sim has the same issue.
Am running a sim health monitor that shows the sims FPS and dialation dropping way below norm, verified I'm not using any terrain textures bigger than 512x512, have a low number of scripts running. There is never more than 5 people on my sim at a time. Would like to know if there is a solution other than constantly restarting the sim as the sim owners, while extremely friendly and service oriented, are not technically savy enough to suggest where to take this problem.