Workgroup Manager - Actions Delete/Rename/Move Folder/File are not allowed in Windchill File System

I get a popup and on starting the Windchill Workgroup Manager, “Actions Delete/Rename/Move Folder/File are not allowed in Windchill File System. Perform these actions in Windchill Server”. 

On saving CAD files from CAD Application it fails with “The following objects failed to save : While saving D:\CACHE\PTC Places\Workspace\model1.prt: D:\CACHE\PTC Places\Workspace\model1.prt – File not found”.

Is the workgroup Manager error causing the CAD application error to save file?

How can i resolve these errors? 

Any help is appreciated.

Windchill Workgroup Manager 11.0 M010

CAD Application - NX

Environment variable:

PTC_WF_ROOT : D:\CACHE\.wf
PTC_WFS_ROOT : D:\CACHE\.wfs
PTC_WLD_ROOT : D:\CACHE\.wwgm