The fpc points to "C:\lazarus\fpc\3.0.2\bin\x86_64-win64\fpc.exe". Should this change when selecting a target with i386 cpu?
No do not change. This is correct. I wrote the example incorrect.
In the directory C:\lazarus\fpc\3.0.2\bin there is only a x86_64-win64 dir. This dir contains a fpc.cfg.
No, I only have set the cpu.
Leave all the path as they are.
But try to also change the target OS to win32. (Though this may not be the problem)
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To be sure:
So you can still compile for 64 bit without error?
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You get the error trying for 32 bit.
Does the error happen
a) when you change the target, and press ok in the project options
b) when you compile (F9)
In case of b)
add to custom option (in project options) -va
Start to compile
when you get the error, right click the messages window, and "Copy" > "Copy all/original messages..."
This may be big, so save to a file and attach.