Let me get some detailed configuration steps for you to be able to send an inbound email to create a ticket.
I received the same error testing and my Item# must be typed with case sensitivity.

Example: Item is "Password-Desktop"

To: service desk

Subject Line: Item#Password-Desktop Cannot log in

This would create an incident.

However I don't know (yet) how to handle if the Item# has a space in it.
Example: Item is "Password - Desktop"

More after I consult with development.

The examples in the documentation around this subject line syntax of the Items are incorrect and are being corrected throughout the document.

The above is tested and true but still getting clarification when spaces are used.

I discussed this and the syntax for Items with spaces are using < > brackets

This is found buried in the documentation under "Email Polling"

However note the syntax listed here has spaces between Item  #  < ItemName withSpace>  Description 
These syntax errors are being corrected.

We are also putting links from the email area to reference the email polling where the syntax is located.

Subject Line Syntax with Item having spaces is

Item#<ItemName withSpace>  Description

Subject Line Syntax without Item having spaces is

Item#ItemNamewithoutSpace  Description

Hope this helps