Due to Windows filesystem constraints, a song filename cannot include invalid characters, such as a "/", "?", or "". One field in the encoding filename pattern includes one of these invalid characters.
The PhatNoise MUSIC Manager automatically replaces the culprit characters in the Artist, Album, and Song Name fields with a harmless '-'. The PhatNoise MUSIC Manager does NOT replace invalid characters in the Genre field.
Most likely, the output filename contains invalid chars because of the Genre field.
To encode your songs without the error message:
Click options, and click the "Encoding Options" tab. At the bottom, choose a filename pattern that does not include the genre, like "Trk - Title". Click OK, and go ahead and press "Start Encoding".
If you really want that genre field in the filename:
Go back to the library view and select all the songs you just encoded. Right click on one of them and select "Edit Tags...". At the top right corner, select whichever file pattern you'd like, and then press "Change Sel. Filenames".