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The template you have chosen is invalid or cannot be found. at Microsoft.SharePoint.Library.SPRequestInternalClass.ApplyWebTemplate(String bstrUrl, String& bstrWebTemplate, Int32& plWebTemplateId)
at Microsoft.SharePoint.Library.SPRequest.ApplyWebTemplate(String bstrUrl, String& bstrWebTemplate, Int32& plWebTemplateId)

How to solve?

Go to CodePlex and find then download STP Inspector. Unzip and then run that app with the STP file you are trying to debug on the server you are trying to deploy the template file to

“STPInspectorWin.exe” will tell you the error. If it says you are missing a feature, export the stp file, then rename it to a CAB file and modfiy the manifest.xml file inside the CAB. Use the STP Inspector to find the missing GUID and do a search then remove that line from the xml manifest.

Repack up all the files in the STP file and the new manifest.
You should google and then use CABARC.EXE. Its a free ms tool. What I did was extract everything in the cab into a folder called test, then go to the command prompt and type in
cabarc N

Example:
C:\stp\BIN>cabarc N test1.cab C:\stp\BIN\Test\*.*

If your Template file is too large, you can change the size limit by using this command:
stsadm -o setproperty -propertyname max-template-document-size -propertyvalue 524288000

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