Directory Plug-in a Nightmare

Tried installing this and could not complete set up steps as when I go to step 2 create categories I get an "invalid taxonomies" error message.

If I go to I get a blank page - I guess because there are no categories set up.

Any ideas as to why Im getting the taxonomies error?

I have installed custompress plug-in but not yet set up any custom fields.

I am using a Gabfire (Atrs and Letters) theme.