That error is unfortunately quite common when using Excel - you get the same error if you try to Cancel as well. Other people have had the same (unhelpful) error message doing other things with Excel interop.
Rather than trying to fix Excel I suggest that you do your own check for the file and display your own error message. For example
Dim xlApp As New Excel.Application()
Dim xlWorkBook As Excel.Workbook
xlWorkBook = xlApp.Workbooks.Add
Dim fileName As String = "C:\Temp\ABC.xlsx"
Dim vRes As DialogResult = DialogResult.Yes
If File.Exists(fileName) Then
vRes = MessageBox.Show(String.Format("A file named '{0}' already exists in this location. Do you want to replace it?", fileName), _
"Microsoft Excel", MessageBoxButtons.YesNoCancel, MessageBoxIcon.Exclamation, MessageBoxDefaultButton.Button2)
xlApp.DisplayAlerts = False
End If
If vRes = DialogResult.Yes Then
xlWorkBook.SaveAs(fileName)
End If
xlWorkBook.Close()
xlApp.Quit()
Note that I only turn off DisplayAlerts if the file already exists.