Todd,
Most likely you have a external reference that is failing. Could be copy geom, feature that was created at a higher assembly level, external merge, etc. (simulate will sometime force a complete model regeneration which will cause this to pop up.)
If in Creo and you have a yellow or red regeneration status (red ball, yellow ball bottom of screen) you won't be allowed to proceed into Simulate.
Once the external reference is fixed you should be good to go.
Hope this helps,
Don Anderson