Ok - so here is the solution I took:
svn propget -R svn:externals /path/to/working/copy/projectx/projectx
This shows all svn:externals properties in that directory. Figure out which is the broken one. In my case guilty was the root dir which had external link to nonexsistant sub-dir. So I deleted the property:
svn propdel svn:externals /path/to/working/copy/projectx/projectx
Thats it.