I have some questions, to get a clear picture of your situation.
Have you been able to compile lazarus before?
What unit paths are set in your fpc.cfg?
Where did you install freepascal?
I have two separated installations of FreePascal.
At first the cvs-updated freepascal in c:\pp which is compiled everyday with
path c:\pp\bin\win32 add
make cycle
make install
and second the standard version 2.0 Beta 2:
In the first installation freepascal caused the error above.
In the second installation there are no compiling problems.
The paths in fpc.cfg are correct, so I don't know.