Not sure where that limit is coming from but there is nothing in preferences of Automator that would make it happen.
Could you send the files involved for testing? Please send it to email@example.com.
Rune Jherd Matas
When you write "already existing spreadsheets" can you add some more information please.
Are you attempting to add new sheets to an existing Excel document?
The limit reminds me of the maximum row limit that older versions of Excel had as restrictions. If the existing file (if I have understood correctly) was created with an old Excel creation engine (or you are now creating a new file with an old engine format for compatibility) it will fail if you have too many rows ... as you do in your example (I think).
If you have already investigated that and it's not the problem, sorry. Feed us some more information and we can dig some more.