If ArcMap cannot find the data file (e.g. shapefile, coverage, feature class, etc.) that a layer is based on it displays a red exclamation mark to the left of the layer name in the table of contents. This is a common problem that you may encounter when you acquire data from more than one source. To resolve this problem, you’ll need to figure out the coordinate system that has been used for each of your data sources. Hopefully, at the very least, the person or organization that provided you with the data will also be able to provide you with the associated coordinate system information. You should also figure out what coordinate system you want to use for your ArcMap document. The best choice is usually a projected coordinate system that’s appropriate for the area of interest (for example, if you’re working on a project in Waterloo Region, a good coordinate system choice would be UTM Zone 17N NAD 1983). Once you have all this information, getting your data aligned in ArcMap should be fairly straightforward. Follow these steps: One of the first things you’ll learn when working with ArcMap is that you have to be very careful about how you manage your data and maps. When you add data to a map document, a layer is created in the map. The layer contains a reference to the data that you just added (i.e. the data itself is not stored in the map document). To successfully use this layer in the map in subsequent ArcMap sessions, ArcMap must be able to find the data that you’ve just added. There are many possible strategies for managing your data, but the simplest approach is to follow these rules: Option 1: Create your working folder on the local computer’s D: drive. Use your network space (and/or other media) to backup your working folder. NB: As of May 2013, Option 2 is currently not recommended. A recent windows update has caused an issue with ArcGIS 10.1. See Esri Knowledge Base article 41119 for further information and updates. Choose one of these options at the onset of your project and stick with your choice throughout the project. Notice that both options include the task of regularly backing up your working folder. GIS projects can quickly become complex and you never want to be in the position where you don’t have a recent backup. If you’re still not sure how to proceed ask your teaching assistant or come to the helpdesk for help. Go to the Customize menu and click Extensions. Make sure that the extension you need is activated. Try running the tool again. If ArcMap fails to start, the most common problem is that there is something wrong with the normal.mxt file that is stored in your windows profile (C:Users<,your_username>,AppDataRoamingESRIDesktop10.2ArcMapTemplates). Change the name of the ‘normal.mxt’ file in that folder to ‘normal.mxt.bak’ and then try to start ArcMap again. If this doesn’t work, contact the help desk. Source.