If the case is an empty label string, it should really throw "Illegal symbol string" or "Illegal function call." This looks indicative of bad edge case handling on SB's part. You should never really see "Internal Error" since that's not a very helpful error.
Also, calling labels "symbol strings" is an odd choice.
I saw this error in a list of errors on SmileBASIC Source a while ago, it's definitely been found before. I'm pretty sure it does have something to do with the GOSUB command.
Ok, nevermind. According to SmileBASIC Source you should never get the "Internal Error" message, but it can be triggered by using some glitch associated with "READ VAR"
@Alex There's an error that can occur when passing an invalid label to GOTO or GOSUB that gives the message "Illegal symbol string", and the term refers to a label passed as a string, so it isn't really inaccurate.