File has "holes"
Your text file is defective. It may well contain useful text, but it also contains at least one unrecognised character such as character(0). The problem could have arisen because it was transferred from one system to another, part of the disk is corrupted, or else maybe the file contains unrecognised graphics, or else it is not a plain text file but e.g. a Word document.
You will see the context where the problem occurred and will be told roughly how far into the text it was detected.
WordSmith can proceed if you wish but you get a chance to skip the text.
You can solve this problem -- which will come each time you choose that text file -- by reading the text file into a word processor and re-saving it as a plain .txt file. Also, in File Utilities there is a tool for finding such files.