FWIW, the Intel compiler gives this output, which seems a bit clearer:
[D:\1\Misc]ifort /FR test.f
Intel(R) Fortran Compiler for 32-bit applications, Version 9.0 Build 20050809Z Package ID: W_FC_C_9.0.021
Copyright (C) 1985-2005 Intel Corporation. All rights reserved.
test.f(10) : Error: An intrinsic procedure argument that has the INTENT(OUT) attribute must not be an expression or constant. [MVBITS]
call mvbits(z, 0, (/T,T,T+2/), (/c,c,c/), (/0, T, T2/))
--------------------------------------^
compilation aborted for test.f (code 1)
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