Could not update smart object files because the file was not found.

Hi everyone.

I often purchase clothing mockup templates that contain smart objects in layers where I can add my own artwork. Been doing this for years with no problems. On a Mac.

I recently upgraded to Catalina OS and at the same time to Photoshop 21.2.2

Now, whenever I try and save the smart object layer I get the error message :

"Could not update smart object files because the file was not found."

One suggestion I found online was to make sure PS has access to all file and folder in the security settings. It didn't, but now it does. And it's still showing this error.

I don't understand what it's looking for. The image is there as a layer. It's not a linked file, I pasted the image to a new layer within the smart object. This always worked previously.

Oddly tho, it does seem to save it and the change is reflected in the main image!

So whilst it appears I can work as normal - it's just annoying that this box pops up every time I make a change to a smart object.

Anyone any ideas what's going on? 

Thanks for your time.