It looks like you created a new Animator Controller? When you are creating a new Animator Controller make sure all of the required parameters are created:
The Demo Animator for the third person and first person character utilizes 22 parameters, which include the following: Horizontal Movement Float value to indicate horizontal . . .
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If you specify a new Animator Controller when creating your character it will automatically add the required parameters. From there you will need to add the transitions. If you are not familiar with how the Animator Controller works this page has some resources:
The Ultimate Character Controller uses Unity’s Animator Controller to control all of its animations. The Animator Controller makes it extremely easy to replace the built-in . . .
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You should also fix the errors first since that can cause other issues. The reason you are getting the error is because the item prefab that you have specified does not have the CharacterItem component. Did you create the prefab through the Item Manager?