The Grid layout algorithm tries to position the diagram junctions relative to a magnetic grid whose cells size is fixed by the Cell Width and Cell Height parameter values. A virtual grid with a specified cell size is essentially placed on the top of the diagram. The algorithm then controls the number of cells that comprise the grid. This is calculated by factoring in the number of junctions that are going to be placed in the grid and the number of junctions that belong to each cell in the virtual grid. In this case, the algorithm detects that the specified grid is composed of too many cells relative to the number of junctions to be placed in the grid, and this prevents the process from completing.
Increase the Cell Width and Cell Height parameter values and run the tool again.