This error occurs if a space character is inadvertently entered in the value field of the XST Library Search Order process property.
To resolve this issue, open the XST process properties and delete any spaces from the Library Search Order field.
This issue is fixed in the latest 8.1i Service Pack, available at:
http://www.xilinx.com/xlnx/xil_sw_updates_home.jspThe first service pack containing the fix is 8.1i Service Pack 1.