This error occurs if a space character is inadvertently entered in the value field of the XST HDL INI File process property.
To resolve this issue, open the XST process properties and delete any spaces from the HDL INI File 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.