An error message "Server unable to process
the request" is displayed when a user with unique permissions on a list tries to update a list item.
This issue sometimes occurs in a Site Collection, however the exact error is unknown.
A workaround is to create a permission level on the site collection which consists of the following:
User remote interfaces (Use SOAP, Web DAV, or SharePoint Designer 2010 interfaces to access the Web site)Open(Open a Web site, list, or folder to access items inside that container).
Assign this new permission level at site collection and site level to the users requiring unique permissions.
The users will now be able to edit the list items.