When the design input is RTL, Reveal Inserter has to read or parse the design to provide the list of debug-able internal nodes. If it encounters errors, Reveal Inserter simply reports "Failed to read design". As Reveal Inserter uses the same parser as Generate Hierarchy, you can click on Design -> Generate Hierarchy in Lattice Diamond to get a list of errors found by the parser. Once the errors are resolved, you should be able to start Reveal Inserter.