Invalid virtual filesystem overlay file

It seems that if any item in the path contains certain non-alphanumeric characters, then you will encounter this issue.

I encountered this problem, because the name of my Xcode scheme contained an apostrophe. My target's name was totally free of non-alphanumeric characters. Removing the apostrophe allowed me to build.

Thank you nanospeck for giving me the clue that lead to this discovery.

Hey I got a feeling about this: I think this might just be a case where Xcode is broken when you have non-alphanumeric characters in your target name. My project also had and apostrophe in the target name

Yours: /Xcode/DerivedData/Paul's_Console

Mine: /Xcode/DerivedData/Lord's_Prayer

Can you try changing your target name. I got an hint about thought from here.

Faced the same problem while archiving my project but you can get rid of this issue by deleting the DerivedData of the app.

Following are steps to delete DerivedData:

1) Select the Organizer from window menu of the xcode.

2) Now you need to select the builds one by one.

3) You can delete the selected build by pressing delete button from the keyboard.

This will clear up all the derivedData for the project and now you are ready to go ahead. Have fun guys :)

Encountered this issue randomly while re-running my app after making changes on Xcode 8.0. I tried Product > Clean, and even deleted the build folder cmd + option + shift + k and deleted the derived data folder entirely, but that didn't end up working. Still got the same error. Restarting Xcode is what ended up working for me.