Selecting the Virtex-II configuration option "Release Set/Reset:" under the Startup tab causes BITGEN to error out.
Solution
Virtex-II does not allow the bitgen -g GSR_cycle option to be set. As such, this option should be selected.
A future release will disable the use of this option from the GUI in that even if it is selected by the user, it will not work. Beyond this, the option itself to select Release Set/Reset:" for Virtex-II will be removed.