Error: Sorry an error occurred Supervised rule for Individual does not exist
It sounds like you don't have a rule for Individuals that is set to be the supervised rule. 

Here's the description of this rule type: "The 'Supervised' rule for each contact type is automatically used to check for possible duplicates when contacts are added or edited via the user interface. Supervised Rules should be configured with a broader definition of what constitutes a duplicate."

In my CMS (Drupal), I find the page to set these here: http://www.mydomain.com/civicrm/contact/deduperules?reset=1

You'll want to choose how a record is determined to be a duplicate when you're adding/editing someone. And then set that rule to be your supervised one.