What are some things to cause an Automator Folder Action to fail on OS X 10.6.4?

Question

I've created the simplest Automator Folder action. 1) Folder action receives files and folders added to TargetFolder 2) Copy Finder Items To: DestinationFolder, checked Replace existing files

I then verified that the folder action was assigned to the folder by viewing Services -> Folder actions setup...

The action worked once and then stopped.