Hmm... your level is named "extreme", right? You didn't rename it recently?

Look in the folder that has your level and make sure there are files called:
extreme.wmp (this is your level, as WED can read it);
extreme.wmb (this is your level as the engine can read it);
extreme.wdl (this is your main script, generated by the templates).

These should be in the same folder, with a couple of other .wdl files like gid01.wdl and display00.wdl.

btw, what is <extreme.sed>? That's not a GS extension I'm familiar with. You say you can understand it, but its the one error message I don't understand!