First time I’ve ever hit this one – Building a custom theme for a client, using the technique Heather Solomon suggested here (Great strategy, saves heaps of time in testing cycles). Everything’s going smashingly, then when I first change the test site to the new theme, it comes up with the dodgy message listed in the title.
Googling found a few people with some unique ideas – Change the name of the theme (puh-lease), renaming the theme folder (uh-huh) and delete the cached theme using SPD (this was plausible at least, but didn’t help me resolve the issue).
In the end, I had to go in to the codepage value within the inf file in the themes folder to a different value (anything but what it was) and it resolved the problem. Thinking about it now, I probably could have deleted the file altogether as generally it’s only used for multilingual environments so they can "read" the theme name in their native language, and has nothing to do with the theme functionality. One trap I’ll remember for next time when copying a theme folder as a starting point for customisation.