There are a few cases that we have seen where the above error is seen when trying to run the setup wizard. This sometimes occurs after performing a factory reset from the stick management web page. We have found the problem and it will be fixed in the update in Jan 2011, but for now the fix is to perform a hard reset on the stick.
To perform a hard reset to factory defaults -
1) While the stick is still plugged into the PC or Mac (ie, powered on with the LED's on) take a paperclip or pin and press and hold the reset button on the side.
2) Count 11 (eleven) flashes of the LED then release the reset button
3) Wait about 2 minutes for the stick to reset, and the setup drive should come back and clicking on the setup.exe file won't cause the above error anymore.