You can try deleting the preference files associated with Virtual Guitarist. Follow these steps:

1. Go to My Computer > C: > Documents and Settings > (your username) > Application Data > Steinberg.
2. Delete the entire Virtual Guitarist folder.
3. If you do not see the Application Data folder, then go to the Tools menu > Folder Options > the View tab > click on button next to "Show hidden files and folders" > click "OK." The Application Data folder will now appear (along with several other folders), and appear slightly opaque.

If this does not help, try uninstalling and then reinstalling the application.

Also, Virtual Guitarist can give this error if there is not a valid sound card in your system. Make sure you have an audio interface of some kind enabled in your computer, and make sure it has the latest drivers installed.