If you are using Director 510, the resolution is to upgrade to SGME 5.4.x or later. If you are using Director 800, the upgrade path is to SGME 18.104.22.168, which is a patch release. SGME 5.4.x is not supported on Director 800.
SGME 5.3.x (except SGME 22.214.171.124) release notes have documentation error where SGME 5.3.1.x (x is < 4) incompatibility with SGOS 5.3.3.y is not documented.
IMPORTANT: After upgrading to SGME 126.96.36.199 or SGME5.4.x or later versions:
1. Remove the VPM from the overlay and refresh overlay.
2. Add the VPM back to the overlay and refresh overlay.
3. Perform any push overlay if required (if there is anything under the overlay definition that has changed).
Without the above steps, you might continue to encounter the error message as specified in problem description.