The AppleFax software will give this error when the retry field is empty. What many users attempt to do is delete the number that is in the number of retries field and then enter a new number. However, when you try to delete the existing number, AppleFax will immediately report the error message you describe before you can type a new number.
The way to successfully change the number in the retries field is to high light the number in the box, and then type the number of retries you want to change to. When you type the new number, it will replace the existing number.