When creating a new template with Document Generation action using Office 365, the following error may be displayed:
'Nintex O365 Document Generation: A file with the name word.docx already exists. It was last modified by user01 on dd/mm/yyy 00:00:00'
Create a new document library then select this library within the Document Generation action to create or select an existing template.
The root cause of this issue due to the document library being corrupted.