It looks like the UZ column in your model does not extend deep enough in this set-up in some locations.
In MIKE-SHE, when using the UZ Richard’s equation and SZ Finite Difference coupling, the UZ ‘soil’ profile and the SZ material column in the model need to overlap: have the bottom depth of the UZ profile extend below the top of the SZ. Also, the groundwater table elevation should always be above the bottom of the UZ profile. Although the water table is simulated in the SZ module, if the water table drops to an elevation that is below the bottom of the model's UZ profile then there is effectively an unsaturated layer that is located below the UZ calculation domain of the model. This can cause errors in the pressure head calculation at the bottom of the modelled UZ profile.
The model error you received shows that the groundwater table was at the very bottom of the UZ profile, rather than lying within the UZ profile, at the specified grid cell (7,146) at the beginning of the simulation. This may have been true for other cells as well, but the model terminated after the first case was detected.
The UZ profiles should be defined to extend below the deepest depth that the groundwater table will reach in the simulation.
It is also suggested that the uppermost calculation layer of your SZ column should be defined such that the groundwater table will always be located within this top SZ layer. This is because the model’s exchange of water between the UZ and SZ is calculated for the top SZ layer only. Because of this, to be safe, the UZ profile could be defined to extend down to a depth that is just below the bottom elevation of this top SZ calculation layer.
To fix your problem, try extending your UZ ‘soil’ profile further downwards to cover the full range depths you expect for the water table: adjust both the ‘Soil Profile’ table and calculation cell ‘Vertical Discretization’ table for the relevant soil/material profiles. NB: The MIKE-SHE interface labels this as a ‘Soil Profile’, but it may need to extend beyond what is often defined as ‘soil’, into weathered rock layers that are frequently unsaturated.
You may also need to adjust the thickness (or top and bottom elevations) of your top SZ calculation layer so that the water table also lies within that top layer throughout the simulation. Getting these depths right for the full length of the simulation may be an iterative process if the groundwater table is predicted to move up and down by large amounts.