I was receiving this same error in VFP 7 when I first started using it on my current PC. I wasn't receiving it on my laptop and no other developers were either. After a short investigation of what was different, we found that I did not have "Batch Processing" check in my Options.

You can find this under, Tools>Options>Remote Data>Connection Default>Batch Processing. Check this and you should be all right. I was conducting an Asynchronous search. You also must have the asynchronous property set on your database: SQLSETPROP(ConnectionHandle, 'asynchronous', .T.)

Hope this helps,
Mark