Second Life users frequently report a Dae parsing error. We found a couple of situations where this error appears (see below). However, in general your first step is to look into the Second Life Viewer Logfile…

Find the Viewer Logfile

The logfile is named SecondLife.log (assuming you use the default SL Viewer). Different viewers might use different names.
Typical locations where the logfiles can be found:
Windows XP C:\Documents and Settings\%USERNAME%\Application Data\SecondLife\logs\
Windows 7 C:\Users\%USERNAME%\AppData\Roaming\SecondLife\logs\

Typical causes for this issue

Special characters in Object names

Most dangerous characters are: & < ! > # $ ‘ “

Resolution:

Remove special characters in Object names and then export again

Special characters in File names

Most dangerous characters are: & < ! > # $ ( * ) [ ] { } ‘ “

Resolution:

Remove special characters in file names (renaming the .dae file should be enough)

Extremely dense Meshes

Please check if your mesh contains areas with very small triangles (edge length smaller than about 1 millimeter)

Resolution:

Try to avoid high resolution meshes. You are doing better when you put high density into textures and normal maps (Normal maps are now supported by Second Life)

Orphaned edges and vertices

If your mesh contains edges which do not belong to any face or disconnected vertices.

Resolution:

Remove these edges and vertices.
Hint: in Edit mode Select -> Non Manifold to find candidates. You may want to disable the “boundary” option in the operator panel.

Duplicate Vertices

If your mesh contains duplicate vertices this can cause issues. However sometimes duplicate verts are on purpose (for example when you use the split edge modifier in Blender 2.73 or older) so you need to test if this issue is caused by split edge or by accidental duplicates.

Resolution:

Remove the duplicate vertices.
Hint: in Edit mode ‘W’ -> Remove Doubles to delete the duplicates.