I had been getting that same message - I tried re-entering the MAK and a playback password, tried re-installing the Desktop, tried uninstalling Tivo Desktop and deleting everything Tivo from my registry, tried just transferring shows through web access, tried creating a new user and installing Tivo Desktop for that user...
It's been 2 weeks. What finally worked is letting Tivo Desktop install and set up the folder for transfers to the default location (C drive).
I have a much emptier second hard-drive, which I had previously directed Tivo Desktop to use for the transfers, but that seems to be a problem on my system (XP home, SP 2). Even now that I can get a (new) transfer to play on my C drive, if I move it to my secondary hard drive, it won't play. Also, files that I had previously transferred directly from the Tivo to my second hard drive will still not play even if I move them to the C drive.
Looks like I'll have to somehow clear space on the C drive.
Thanks to everyone who posts on this forum - I've only ever been lurking, but you guys kept me going. It was another post here that made me try installing to the default location...
Not sure how this might apply to your situation, but I hope it helps someone!