"It" used outside of "whose" clause

This is a potentially confusing error message because it is perfectly legal to use it without a whose clause as long as you form the syntax correctly. This message just means that interpreter does not know what it refers to, typically due to a syntax error. For example:

Q: it
E: "It" used outside of "whose" clause.

Here the "it" keyword is used in a context where it can't refer to anything. Here is another example:

Q: system folder (name of it & pathname of it)
E: "It" used outside of "whose" clause.

The error indicates that the interpreter does not know what it is, because the statement is formulated incorrectly. The correct statement would be:

(name of it & pathname of it) of system folder

To ensure that it points toward an object, you must make sure that you include of <object> after the statement.