If the above error message appears, it is because a dynamic text element cannot hold any Template configurations. That is, the text element has some configuration such as color theme, proofing language, image header, etc.
Text elements can hold content controls, but not these kind of configurations, which are handled completely by the destination template.
How to fix it?
Download the document from the admin page and open the Template Designer. Under the tab Documents, delete any configuration that is present: