Problem:
When I view synchronization status, I get the error message.
Solution:
In my case, it is a permission issue. For some reason, the merge agent account does not have a read permission on the snapshot folder.
For other possible reasons, see this thread.
http://social.msdn.microsoft.com/Forums/en-US/sqlreplication/thread/7dab2dc0-6dc4-4e4f-8624-b495fec02c04/
P.S. After successfully configuring the merge transaction,the merge transaction can go bidirectionally as long as you click 'Start' on the View Synchronization Status' dialog box for the local subscription after the MDL activities on either the subscriber or the publisher.
