I too have the exact same error message (Air Encoder Error) on my new MPP.
I have not flown it.
I initially used the iPhone 7+. I have tried DownGrade/Upgrade using Assistant 2.
I have the original memory card, but also used the 64G card as well from DJI.
I have formatted both cards using the Go 4 app, and formatting using Windows computer.
I have tried with and without the memory card installed.
I have tried with iPhone 7+, and a cellular iPad Pro via usb. (current iOS 11.0.3)
I have tried different batteries.
I have taken a few photos and video's as a test. I didn't get any errors while doing this. I was able to review the pictures/videos taken. I am new, but it appears to work in this regard.
I think I tried everything.
The only "Unusual" thing that occurred I would like to share is that when I tried to downgrade/upgrade the controller,
my new Mac Book Pro called out an error:
"USB Accessories Disabled. Unplug the accessory using too much power to re-enable USB devices"
Well, that's is strange! I am following the instructions.
Anyway, I unplugged the controller from my Mac Computer, and plugged it into a windows computer, and did the downgrade/upgrade to the controller.
I still have the error: Air Encoder Error (0x4000000)
They delayed shipping by almost a month. One would think there would be no issues.
Now I have to make a decision. I want to return it since it hasn't flown.
At least I am not alone.