Update on this as I received this from eVolve:
So this is a known bug within the 7.0 update. There is a fix for this though. Please do one of the following:
1. Open your default 3d view and make sure that assemblies are visible (make sure no worksets or visibility graphics are turning the assemblies or elements off). Basically, this view should be unfiltered.
2. You can delete your current default 3d view and then recreate the 3d view.
Also, after you fix the view if you still get the error you should try to have the 3d view open during the sheet creation process.
This issue will be fixed in the 7.2 update. Please let me know if you have any other questions or if this doesn't resolve the issue.