The selected file could not be copied, because no file by that name exists. Please check that you... - Drupal Image module

Is this happening to you when you're using the image module trying to submit an image node? Than the problem is probably the workflow module. Those two modules conflict with each other especially when a state is changed from published to unpublished. Turn off your workflow module and you'll see the problem disappear.
The problem arrives when this function is called:

image_create_node_from($filepath, $file);

Advice: stay away from the workflow module! It took us a whole afternoon to find out this was our problem.