request to the server failed (error 2) when un-checking "events affect availability"

My director has been having an issue with calendar events being automatically declined. After digging through the settings in gmail, ical, and eventually unlinking outlook completely, we finally came across this setting in iCal, "Events affect availability" - which sounds like it could be the setting that is causing the auto-declining of events.

However, when he unclicks the box and selects OK, the calendar produces this error a few seconds later:

"request to the server failed (error 2)"

We've tried restarting iCal and tried it on by going through his linked other calendars but the result is the same. However, I cannot recreate the error on my devices.

Thanks!