Does the following passage contain a colon error?

After several months, he finished the first draft and, when it was published: many people thought he was a good writer.

No, the given passage does not contain a colon error. The colon is used correctly to introduce the explanation or result of the action of publishing the first draft.

Yes, the passage contains a colon error. The correct placement of the colon should be after the word "published," as follows:

"After several months, he finished the first draft and, when it was published, many people thought he was a good writer."