I've been getting this error with iTunes 11.1.3(8) -- latest version. I've avoided by de-selecting simultaneous downloads.
This coincides with log messages such as:
sandboxd: ([###]) xcscredd(###) deny file-read-metadata /Users
sandboxd: ([###]) apdpd(###) deny file-read-metadata /Users
iTunes: Possible unresolved transaction race -103/(iTunes/iTunes Music/Downloads/Netflix.tmp,(null))
iTunes: Possible unresolved transaction race -103/(iTunes/iTunes Music/Downloads,(null))
(yes, 103 above, yet 1003 error code, perhaps no relation)
The "transaction race" makes me think there's a Mutex that's being un-gracefully-waited-for, and the bail-out message is simply a 1003.
As a workaround, I've disabled/unchecked "Allow simultaneous downloads" in the download dialog (if you click the down-arrow in the upper-left of itunes window, the dialog shows you the downloads in progress/completed/pending; this checkbox is at the bottom) ...
So far, no recurrences, but we'll see.