Not having any real issues with Poser 12 just a general question and this applies to Poser 11 as well. When I open Poser I get this error I also see the same error pop up when I access my mats library for the first time each session.

Would changing my security settings for Poser get rid of these error poppups?

W10, Ryzen 5 1600x, 16Gb,RTX2060Super+GTX980, PP11, 11.3.740

I don't get that error.

I would normally expect the error to give a file name, since it says "the system cannot find the file specified." But it just says 'C:' which is a path with no file name. I suspect you have something in your library with a bad path so the filename is missing. If it's only when you open your materials library, and especially in a particular runtime, that might narrow down which file it is. If the file is actually missing, permissions won't help.

Are there any items there with a missing thumbnail? That's not the only thing it could be, but it's one possibility.

If it is a permissions issue, you should be able to get around it by running Poser as an administrator. Right-click on the Poser icon (you might need to hold down the shift key) and pick "Run as administrator." If that doesn't prevent the error, it's not a permissions issue.

that makes sense that there is a corrupt or missing file in my mats runtime. I'll have to start taking out folders and see if that stops the errors.

W10, Ryzen 5 1600x, 16Gb,RTX2060Super+GTX980, PP11, 11.3.740