See http://support.microsoft.com/kb/177665/EN-US/
Win32 programs are limited to a 256-character string size limit because of the MAX_PATH variable.
The MAX_PATH constant is defined for Windows32 API in the WINDRES.H resp. DEFINES.H file as '#define MAX_PATH (260)', which includes the drive letter, colon, and root directory characters.
See http://blogs.msdn.com/junfeng/archive/2006/02/20/535875.aspx
Handling long path is hard. Win32 has a file name length limit of MAX_PATH (which is defined as 260). People are looking for ways to extend the limit, as the file system supports a file name up to 32767 characters long. Apparently this has huge AppCompat implication. As we can see from this example, current applications may already have difficulty handling file path within the MAX_PATH limit, let alone file name with 32767 characters long.
Keep in mind that the length of 32767 characters is in fact less then this range because there are stored unicode characters, which may have a size up to three or four 8-bit sequence-characters for one unicode character.
We had already this discussion here in the forum some time ago, anyway there was no change, and so there are repeatingly some users that stumble over this hurdle in Mp3tag filename creation.
As a workaround try to use the function $left(your_filepath_string,256) and do not put the result into the filename directly but put the result into a temporary tag field, which you can check by your eyes if the filepath would have been formatted well sized. Afterwards the last step is setting the %_filename% directly with the value from the temporary tag field.
DD.20070322.0949
See also this thread:
what is maximum number of characters allowed in filename?
DD.2010830.1100.CEST