Although this is a rather old thread, I faced the same issue when setting up one my projects.
I just wanted to share the solution that worked on my project in case anyone else is facing the same issue.
As I was also working with user defined subbasins and streams, I imagined it could be something wrong with the shapefiles I was using.
Basically, I just ran the ArcToolbox --> Data Management Tools --> Features --> Repair Geometry, reloaded the updated shapefiles and everything ran fine afterwards.
Cheers,
Arthur