Hi Pacman..fixed by deleting the whole scenario file and redo the whole thing..that helped..The program launches VASSAL+VASL to insert the labels into a scenario. This error is most likely because VASSAL crashed.
Try it again. Try to reduce memory usage on your computer by closing programs and/or rebooting. In the worst case, you can create the labels manually in the scenario (check the help, tedious, but it will work).