Alan,
The launchers on Star Trek Next Gen are prone to failing wires in the harnesses for the coil/optic/lamp on each unit. Unlike T2, they have an optic to show if a ball is loaded into the rotating platform. If this falsely shows a ball present (or a ball gets in under false conditions), the launcher rotates to clear it by firing it away.
I saw cases of the optic 'made', i.e. the beam broken (or not lit at all) with the launcher at the Home position, but showing Clear again during the traverse - the program then didn't kick the coil, but went to park the launcher. Whereupon the optic went out again, repeating the cycle until the program called a halt, left the launcher at the Mark position and posted the error message. A wire or wires in that harness was/were breaking down as it flexed. The optic switch in each launcher is a normal switch, so they're covered by the usual switch tests; the Home and Mark switches are configured as an extra switch column, No. 9, hence the additional tests for them.
The 'Can't Find Home' message seems to be something of a catch-all description - after a few encounters with it, I thought it ought to be 'Can't Find Home, & Clear' i.e. without a ball loaded.