I have about 950 errors out of about 7000 songs. I have just under 9000 in my library so I may have more before it is all finished.
So far, I also have 370 in a 'Not Eligible' status. These are all my hi-res files from HDTracks.com. I am guessing that I will need to create an AAC version, let iCloud sync it, then delete from my home library. I would still like access to them on a mobile device.