The I/O error 1784 usually refers to one of the Prevail Document Control files being locked by another user on the network.  The document control file concerned is usually the .PDD file.  Close out of Prevail and Microsoft Word and see if you can delete the .PDD file for the document that you are attempting to merge.

The .PDD file will be under your Prevail Server folder, beneath a DOCS folder.

If you cannot delete the file then it is definitely in use.

Resolution:  Reboot the server.  or get everyone to reboot their workstations.

Resolution 2:  Rename the .DOC (or .RTF file) slightly and reopen the document in the document designer - immediately resave it and your new document will merge just fine.