I was really at a loss on why my perfectly working mxml module failed to load in design mode.
After spending hours on isolating this error I found the following and hope it will benefit anyone having similar problems.
If you have an item renderer inside for example a spark Tile, and this itemrenderer extends the spark itemrender class, then this particular code will result in the above error message in the design view property panel:
<!-- disable for now
<s:State name="selected" />
Apparently you cannot have a state declaration without defining actual states.