I saw that this has to do with being on external drive, but a fellow developer has it working on his external drive, he lives in AZ, I am in CA, so this is not making sense. One difference is he has a Mac Mini and I have a Studio with a M1 Max and 64Gb.

I have a Studio wiht M1 Max 64Gb and a G-Force 500Gb external drive and I getting this error in CA. Fellow developer in AZ has a Mac Mini wiht 16Gb and a 1TB external drive and he is not. Would appear to be a drive size error, but I will need to try with a 1TB G-Force External drive.

Xcode 16 Beta 3 also does not allow predictive code completion to download on a 500 GB external drive, and I will now start over on a 1Gb external drive; not a good use of my time, and nothing in the release notes about this limitation or why some are allowed and others not.