Having searched an old EE 1 site's source it looks as though that's an error triggered by Mark Huot's File fieldtype. Here's the corresponding code snippet from ext.mh_file_ext.php:
foreach($file_tmp_names as $file_key=>$file_tmp_name)
{
if(@move_uploaded_file($file_tmp_name, $server_path.$file_names[$file_key]) === FALSE)
{
$errors[] = str_replace(array('%{field}', '%{file}'), array($file_field['field_label'], $file_names[$file_key]), $LANG->line('error_transfer'));
}
}
Presumably you have an invalid path configured somewhere or this is a permissions issue. If you remove the @
before move_uploaded_file
that will disable error suppression and you should see a PHP error that details exactly why the upload has failed.