The error is caused by TestStand not being able to finish the LoginLogout sequence before its time limit. These limits are set under Configure >> Station Options >> Time Limits. They will allow you to interrupt a sequence that is taking too long to shut down.
The real problem may be in the LoginLogout sequence, in the file \Components\User\Callbacks\FrontEnd\FrontEndCallbacks.seq (or substitute "NI" for "User" in the path). If something in that sequence doesn't finish executing within 10 seconds, due to an extreme slowdown or a problem with the sequence, you will see this error. If you have modified that sequence, this could be the cause. You will need at least two steps in the sequence, one for Login and another for Logout. They should reference frontend.dll. If you have a modified callback in your User directory, trying copying the default callback from the NI directory.
Also, make sure that you complete or terminate other sequences before trying to close TestStand, or you will see a similar error message.
Good luck and feel free to ask if you have further questions.
Steven Reasoner Applications Engineering National Instruments