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If you import a folder, then reimport that same folder but to itself (instead of its original parent or some other location), then the logic that prevents duplicate urls will try to create a recursive logical link, which is not allowed (hence the error message and the halted import).
Here is an ASCII art explanation:
Root Item
..Imported Items <- you initially import a Test folder here
....Test folder <- if you later re-import same Test folder here (or below), a recursive link would be created (which is disallowed)
......Test subfolder
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