This issue was caused by a download directory setting being set for the user in user preferences. Hosted customers should not have user preferences set for the DC download directory. Make sure that there are no user preferences set for the download directory. If there are user preferences there, remove them and then re-try importing.
Since HostNet customers have been upgraded to Progress 11, this error should no longer occur.
Steps to Duplicate
1. Tools >System Utilities > Donor Central > Retrieve Suggestions from Donor Central 2. Error message occurs