Do you have any breakpoints set? See Microsoft KB article:

FIX: "File Is Not Open" Error Message When You Save a Form May Cause Infinite Loop
Article ID : 314651
SYMPTOMS
If the following error message appears when you try to save a form that has a breakpoint set, Visual FoxPro may go into a infinite loop:
"File is not open."

Also, just a stab: Does your form have code pointing to any stored procedures in databases that are not opened?

Chris

>This used to bite me occassionally but it's not happened in ages.  Then twice recently, on two separate forms, it's started happening again.
>
>The scenario: you're modifying a form, you've written chunks of code in your methods, you're happy with your progress, then you go to close the form to save it (or run it and save it on the fly).
>
>You get "File is not open" error ...