You're want to add a new Work Item or updating a Work Item and during the save you got the TF20017 error:

This is mostly because in the iteration path, you didn't choose an iteration for the dropdown, but typed in manually a new iteration.

The solution is easy.  Just go to the menu:

      Team > Team project Settings > Areas and Iterations

Go to the iteration tab and add a new child node.

One more thing, you need to wait till the Datawarehouse job has processed the new information, before you see it in the dropdown of you work item.