Microsoft is working on a resolution for an issue that causes Windows Defender Application Guard (WDAG) and Windows Sandbox to fail to open. While the company is working on a more permanent solution to the issue, there is a simple workaround for the moment, restarting your devices. This mitigates the issue while we wait for a more permanent fix.
A Microsoft support page outlines the issue (via Techdows). When your PC runs into the issue, you'll see one of the following error messages.
ERROR_VSMB_SAVED_STATE_FILE_NOT_FOUND (0xC0370400)
E_PATHNOTFOUND (0x80070003)
Microsoft explains that you can mitigate the issue by restarting your device.
If left unmitigated, the issue can cause security problems. Windows Sandbox allows applications to run within isolated desktop environments. WDAG opens untrusted sites in isolated Hyper-V containers to help keep Windows 10 and Microsoft Edge safe from online attacks.
Microsoft updated the support page on July 24, 2020 and is working on a resolution for the issue that will come in an upcoming release of Windows 10.