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Which compiler are you using, Imagecraft or HiTech? If HiTech, do you have the Pro version of the compiler? If you have PSD5.0 SP4a, then this version does not have a free C compiler which may cause this error. Upgrade to the latest PSD5.0 SP4.5. This version has a free Imagecraft C compiler.
Yes, this is the error which you get when no compiler is there. Upgrading to PD5.0 SP4.5 will resolve the issue as it has free ImageCraft compiler.
Thanks graa and sgup. Turns out I was using SP4a. Have switched to SP4.5. Problem Solved
Nice to know that problem got resolved