Seems to me that the server believes that the NPC's at his location aren't at his location. I would assume that's the only way one could even generate such an error message as I have no idea how I'd even attempt to party with NPC's that were somewhere else.
That's not the problem. After much testing, the problem has been recreated.
Steps for Recreating Error:
1) Have two browser tabs open, one for moving around, the other for looking at the party screen (make sure you start out in a location that has NPCs you can party with).
2) Move out of the entity you're currently in, and move into a different entity. If you started directly on a planet surface, you only have to enter a facility, ship, or vehicle.
3) Switch to the tab for Party and try adding an NPC. You get this error: "Unable to party with something at a different location."
That's the only way we could find that gives us this error.
I've had this happen when trying to add NPCs to my party that are standing on a squadded ship, and had to either un-squad the ship (container) or manually direct the NPCs out of the squadded ship and party with them from outside or on an un-squadded ship.
"It never ceases to amaze me, the things that very small people can find to make themselves feel very big."