The simplest solution I've found to this problem involves changing the exact way you tell Alteryx to connect to the file. When I would try to paste the path of the file into the Input Data tool in the Connect a File or Database box, I would get this error.
Instead do this:
1. Click the Input Data dropdown,
2. On the Data connections window, select Files on the left side
3. Drag and drop the file to the Select a File space.
After you release it to that space, you should see the Data connections disappear and the Select Excel Input window appear. If it does, you're good to go. Somehow Alteryx Designer doesn't like the path paste method, but luckily there was an easy workaround for me. Hope it works for you too!
The paste of the path method is likely to not be working due to when you paste the path there is no sheet information in the path?
The image of your error isn't displaying so I have to say this is a guess.
With regards to needing to change files to XLSX @271828.
If you install the driver in my link this should fix the issue. IT will be able to install it. When they patch the server that shouldn't reverse the installation of the driver, so should only be a one off task for your IT that then no longer impacts xls when the server has future patches. - I appreciate I am a little late in replying though!
And in reply to @Kardasz - I don't know what you mean by a yearly cost? The driver is free from Microsoft and should be a 1 off install for IT (maybe you referring to the internal IT cost?)