If you receive this error when adding a vendor that means they are in your Vendor List as Inactive. By default, the Vendor List is filtered to show only Active vendors. Please follow these instructions to reactivate the vendor.
Navigate to the Vendor List and click the "FILTERS" button. Click the dropdown under "Active/Inactive Vendor" and select "Inactive". Then click "Apply".
Find the vendor in question. In their row click the settings gear in the far right column and select "Activate".
Click the "FILTERS" button and select "Reset". It will automatically switch back to the Active filter. You can now click outside the Filter box and find your Vendor in the Active List.