The checkerboard error indicates that Final Cut Pro cannot find/access some of the media files. The problem results from storing Motion Content in the Library and not in the Movies > Motion Templates folder – in this setting, Final Cut Pro copies the folders with the projects that are on your timeline from the Motion Templates directory into the Library file. For some reason though, the app doesn't copy our global Media files which are in a directory above which results in the checkerboard error.
To fix this issue, go to the Library's settings (Ctrl+Cmd+J) and modify Storage Locations changing Motion Content back to the Motion Templates folder. Restart Final Cut Pro afterward.