Description
The script used by the script tool does not exist in the expected location. When a script tool is created, there is an option to store relative paths (instead of absolute paths). If this is set, the relative location of the script and the toolbox that holds the script tool must remain constant. Moving either individually will result in this error when the tool is executed.
Solution
Right-click the failed script tool and click Properties. On the Source tab, confirm that the script file listed exists and update the path or script name as necessary. If the script and script tool are not meant to maintain a relative location, uncheck the Store relative path names option on the General tab to prevent this error in the future.