I thought I'd share the solution in case anybody else encounters this in the future. The error means that there are too many coaches assigned to a team and, as a result, certain coaches contracted to the team cannot be added to the team's coach list. In other words, it's a roster error (you can check for roster errors using the EHM Updater and the EHM Editor - just click on the Roster Errors tab). The solution is to remove some of the coaches from that team.
Interestingly, a team also had too many directors contracted in my particular database. However, I do not recall any similar such "director not found in director list" error being displayed.
