I'll answer my own question....
The GPIF II hardware imposes some limitations on the state machines that can be implemented. Mainly, these
Full support is limited to state machines that are limited to two (or fewer) outgoing transitions from each state.Such state machines are called binary state machine in the rest of this document.
Each transition equation is limited to the use of four (or fewer) trigger variables.
Isn't it embarrassing how you can find the answer to your own question, by reading the documentation, as soon as you've posted a question !!
Not so embarrassing. I'm new to this product and ran into the same issue. The very informative error message from GPIF II Designer was:
Unable to synthesis the state machine.Please try changing outgoing transition equations from state 'PUSH_DATA_SCK0'.
Note it just says "try changing" - not "too many."
I also managed to find the information after digging into several documents. It would be nice if the tool itself were better at describing the real underlying issue.
As an intro to the GPIF II Designer, it's good to walk through building using training wheels of an application note first. Even if the target application does not match the application note. I happened to start with AN75779 which explains the "no more than two outgoing transitions" limitation. They run into this in the application note and explain how to construct more than two outgoing transitions with the expense of an additional state.
Page 30, figures 21 and 22
The document does not cover the maximum number of trigger terms as the project does not require this. When I tried adding more than 4 terms to my own project, GPIF II Designer asked if I wanted the state machine to be automatically changed. I didn't want to really do this - so I bailed.
I think it's good to run through an application note that builds an entire project as there are good generic tips contained in the ANs not only limited to GPIF II Designer.