I have also experienced this problem, twice to be exact. The first time was a faulty Panasonic SD Card would you believe? This was replaced with a new one which is working satisfactorily.
The second time was because the SD Card memory was overloaded despite the fact it was a 256mb card and showing just 38 Folders. Apparently, this was because I had several CUSTOM STYLISTS settings saved which uses up a great deal more memory than ordinary Panel Memory saves, so my suggestion to you is:-
(1) Try deleting one or more Folders (saving them to floppy or another SD card first) or
(2) if you know someone else with a KN7 try loading your SD card to their instrument and if it behaves in the same way, it has got to be the SD Card. At least you will know it is not your KN7 playing up.
Hope this helps.