The spatial reference of the layer does not match the projection of the data frame.
Solution: Ensure that the projection information of the layer matches the other layers and the data frame. This may mean that you need to reproject a layer to match the data frame or change the projection of the data frame to match the layer.
More information: This warning occurs whenever the data frame's projection is different from the layers in the map. You often see it when you have added layers from multiple workspaces, as the data frame takes on the spatial reference of the first layer added to the map. You may not be aware that some data is being projected on the fly until you see this warning.
While you can still edit the layers in the map, be aware that you may create or modify data that is inaccurate once saved. For examples of the effects of editing while projecting on the fly, see About editing data in a different projection (projecting on the fly).