During assembly I want to replace one components with a sub-assembly. But the window always shows "File name entered was invalid, not found, locked or of an incompatible type". I need to delete the old component and insert the new sub-assembly. Does SolidWorks does not allowed replace the component with sub-assembly? Thanks for any comment.
That depends on which version of SW you are using.
SW14 allows replacement of part with an assy, and vice versa.
2014 SOLIDWORKS Help - Replace Components PropertyManager