The file to delete to remedy this error is the "LauncherUserSettings.xml" file, to do so perform the steps below:
  1. To start first close out of the launcher if its open (right-click the ddo "shield" icon near the Windows "clock")
  2. Now click on the Windows "Start" button and click on "Computer" or "My Computer"
  3. In there double click on your "C:" Drive (Might display as "Local Disk C:")
  4. In there double-click on "Users" if you are on Vista/Windows 7 or "Documents and Settings" if you are on XP.
  5. In there double-click on the folder that is the same name as your XP or Vista/Win7 Username (as an example if when you log into your computer you log in as "Bob" then look in here for a folder named "Bob" as well)
  6. In there you need to enable hidden files and folders view:
  7. - XP: Click on "Tools" > "Folder Options" > "View" (tab) > click to activate "Show hidden files and folders" in the list
  8. - Vista/7: Click on "Organize" > "Folder and Search Options" > "View" (tab) > click to activate "Show hidden files and folders" in the list
  9. Now once that is done you should see "Local Settings" if you're on XP or "AppData" if you are on Vista/Win7 double click on that
  10. In there you should see either "Application Data" (XP) or "Local" (Vista/7) double-click on that
  11. In there find the folder "Turbine" and double-click on it
  12. In there double-click on the "Dungeons and Dragons Online" and then the "Launcher" folder
  13. Now find "Launcherusersettings.xml" and right-click that and choose "Delete" then relaunch the game
Thanks go to Mutantbee for the catch and reminding me of some ommited folders

EDIT: It's come up a few times so I wanted to add: If you cannot find the "Launcherusersettings.xml" file or you still get the error after deleting one, most likely you might have gone into the wrong folder at step 5 up above.