I am getting this message after loading up every theme I have downloaded so far (for latest litestep version, all of them):

http://desmasic.samods.org/extras/obsidianError.jpg

I edited the default theme and many popup features a lot before installing any custom themes, so I might have deleted something somewhere. I have tried searching for this problem here (search nto working) and wiki, but still didn't find this error related solution.

I am actually going to modify the default theme with new graphics and all to suite my taste later, but this error is a big pain in the ass. It loads up the themes allright, but this message box keeps popping up when windows load or whenever I recycle theme.

Any ideas? (I have the latest updated version of litestep btw).

Well, probably you have an older OS :P
Simply define CommonDesktopDir in your step.rc or search in the personal rc-files for $commondesktopdir$ (maybe in popup.rc, ...) and comment those lines.

If a Error Message says:
Variable "..." not defined.
Then you can always try to define this Variable, then at least this Message won't come again :)

Using Windows XP Pro (SP-2)

Oh I forgot to mention. In the themes that show this error, I get many useless files/folders on desktop instead of my usual desktop shortcuts. Those files usually look like they are from Profiles/My Documents section of windows (even dll files are there).

Anyways, going to try your solution now. :)

Ok, new error:
http://desmasic.samods.org/extras/obsidianError2.jpg

I defined CommonDesktopDir in step.rc and the message is gone, but this new error comes up for every theme now. I am trying it out on many themes, esp trying to make Obsidian work, but this error pops up everywhere :(

That is probably due to a wrong/outdated xDesktop Config.
Either deactivate the DesktopIcons ( SHIFT+LeftClick Menu in Obsidian ) or try to call this Bang manually via LSXCommand, ...

or Simply don't use xDesktop anymore :)

Hmm.. I hate the default desktop in litestep, the way icons don't give mouse over and can't be dragged. So I'll have to make this work, I actually tried replacing it with different XDesktop module but the one in the skins was updated one.

-- ! xDesktopCreate replace ".desktop"
I'll try that one.