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Yeah -- I made sure that the .tde file was closed and it still won't overwrite. This morning I actually made a note to make sure I ran the workflow before anything else was open (even outlook) :) and it still failed.
Thank you! So.. what happened was IT did some cleaning of our network drives and the drive I was outputting the .tde extract to was modified to "Read-Only". When this happened, it made the overwriting impossible under my account ID.
Thanks for mentioning the access privileges as this helped my team at work with other Read-only issues as well.