This sounds an aweful lot like some sort of DRM (Digital Rights Managment) error message. I could be wrong but do you have Windows Media Player 9 installed and do you have the DRM enabled on it ?!?
 
I'm sure somebody will have a better answer then me, I've never seen this one before.
 
EDIT: I found more info on Microsoft's MSDN site. Seems to be related to web based apps or something like that.
 
Error Code 1278
 
This may then have something to do with .NET/C# coding, not sure however

yeah i found that link as well. I've got no clue what it could be about. So are you saying DRM should be enabled in WM9?
 
its weird because Im just running a small util and it has nothing to do with media or anything like that.

That is the question isn't it, I really don't know but perhaps the fact that you are running W2K3 may have something to do with it
 
I myself don't like nor want/use DRM but perhaps with this version of the OS you're forced/coerced into using it wether you like it or not and perhaps this is the result of using a non-Paladium enabled app.
 
Could somebody with more .NET experience help on this one, anybody ?!?

I was having the exact same error message for an executable. On a whim I did this and it worked
 
Right click the exe
Choose Run As
Select administrator and use the admin password. Walla.
 
Hope this works for you.