I was getting "anerror occurred while processing images Acrobat" when trying to reduce file size of a pdf. This solution worked for me:
if Acrobat gives"an error occurred while processing images Acrobat" then do this:
You need to go into Advanced>Print Production>Flattener Previewand then apply the flattening first (you can compress the images right in thereas well).
Once you do that youcan "Reduce File Size"... interesting that Adobe hasn't put thatmessage into the error handling for this. ;-)