Erbium-doped TiO2 materials are promising candidates for advancing quantum technologies, necessitating a thorough understanding of their electronic and crystal structures to tailor their properties and enhance coherence times. This study explored epitaxial erbium-doped rutile TiO2 films deposited on r-sapphire substrates using molecular beam epitaxy. Photoluminescence excitation spectroscopy demonstrated decreasing photoluminescence lifetimes with erbium doping, indicating limited optical coherence times. Lattice distortions associated with Er3+ were probed by x-ray absorption spectroscopy, indicating that erbium primarily occupies Ti4+ sites and influences oxygen vacancies. Significant lattice distortions in the higher-order shells and apparent full coordination around erbium suggest that additional defects are likely prevalent in these regions. These findings indicate that defects contribute to limited coherence times by introducing alternative decay pathways, leading to shorter photoluminescence lifetimes.