What does the error message "Design Verifier failed to initialize: Checking compatibility failed" mean?

I receive this 3 errors when I invoke the Design Verifier Compatibility Check for the model I cannot find any information as to the cause of these errors.

The first error shown in in the Diagnostic window is the one already mentioned in the question above. The second error says "Error sfError using contruct_error(line 108) Failed to create file modelname_replacement_sfun_debug_macrros.h" The third error is "Failed to compile "modelname_repacement'

I am using R2012b (Simulink & MatLab 8.0). Design Verfier R2012b (2.3)

Can anyone point me to a method of identifying the cause?

Thanks!