Error placing or opening PSD files in Illustrator
When you place a PSD or open a file that contains a link to a PSD, Illustrator returns the following error:
"The file is not readable."
The PSD has a spot channel defined with a color book that is not installed in your instance of Illustrator.
Solution 1: Change to a non-color book definition in Photoshop
Work with the file creator to determine which color books were used in the definition of spot channels. Then, install those color books on your system. Alternatively, the file creator can edit the image as described below, using a color book that you both have in common.
Open the PSD in an instance of Photoshop that contains the necessary color books.
Open the Channels panel and double-click the Spot channel.
Click the color in the Spot Channel Options dialog box.
Write down the LAB values, then choose a common color book from the Books pop-up menu.
Click the Picker button and adjust the LAB values if necessary.
Click OK twice to exit the Spot Channel Options dialog box.
Save As and save a version of the file, or replace the existing file.
Solution 2: Embed the PSD file in Illustrator configured with the color book
If you want to be sure that others can open your Illustrator file regardless of which color books they have installed, embed the image rather than maintain a link to it. Place the image again and choose deselect the Link option, or use the following method:
Select the image.
From the Links panel pop-up menu, choose Embed Image.