You probably don't have the Visual Studio 2008 runtime installed. We couldn't force our AIR installer to include the VS redist installer and sublaunch it, so per the release notes you may need to download and install it yourself. Please see the release notes for a link to the installer from Microsoft.
Adobe Wallaby Team
Does this mean we have to spend a fortune on Visual Studio software to fix this problem or is there a free download which puts it right? I couldn't find the link you referred to... probably looking in the wrong place but if you can tell me where to look that'd be very helpful as I've had exactly the same problems.
You can find the installer for the runtime here: http://www.microsoft.com/download/en/details.aspx?displaylang=en&id=29
You don't need to have Visual Studio installed.
I am getting the same error. I followed the link above, but it doesnt give me the option to run the program, just to save it. When I open the file, it's a text document. Should I just reinstall CS5 and start over?
Uninstalling and reinstalling CS5 won’t fix you problem.
Per the previous post in this thread, so per the release notes you should download and install the VS 2008 runtime. Please see the release notes for a link to the installer from Microsoft.