I had created a path: "C:\c++\.." and had my source in there.
BCB 6.0 came up with the above error.
To fix it:
1. Close BCB
2. Clear the ENTIRE registry of all references to the path "C:\c++"
3. Delete all the most recent config files in \bin, \lib, \projects in the bcb install folder.
4. Open BCB and create a new project
Couldn't find the solution anywhere, so when I solved it, thought I'd post it!!