Said another way, the "Create New Local" option is disabled (gray'd out).
I've written about this in the past. My post focused on the network relationship between local and central files. It boils down to the central file being created by a user whose computer is mapped to the server and project folder in one manner and the person who can't manipulate the "Create New Local" option is mapped differently. As long as this condition exists this "rogue" person won't be able to synchronize their work, sadness ensues.
Daryl wrote about this occurring because of different software versions and Luke echoed his post later. While this certainly can and does happen we just need to take care that we don't actually save a file that has been opened in a newer version of Revit unless everyone is prepared to upgrade their project files too (assuming a large team all using Revit).
It's been my experience that the network path conflict is the more frequent culprit, or at least the one with the greatest "danger". Remember if you don't know why the option isn't available to you, check with someone to make sure you can continue safely. Said another way, "Be afraid, be very afraid".