For XP Home Edition Users, to solve this problem do the following:
*** Make sure that your Chrome browser is closed before doing these steps.***
1. Boot into your Safe mode (Press F8 at the start up of your computer)
2. Open My Computer
3. Click Tools>>Folder Options>>View Tab
4. Under the "Hidden files and folders", make sure you select "Show hidden files and folders"
5. Click "OK" to close the Folder Options window
6. Go to C:\Documents and Settings\Yournamehere\Local Settings\Application Data\Google\Chrome\User Data
7. Right click file, "Local State>>Properties>>Security Tab
8. You will notice that the "Group or user names" box is blank
9. Click "Add".
10. Type your name (the name that you use to login to your computer or use the "Yournamehere")
11. Click "Check Names" to verify that you typed in the name correctly.
12. Click "OK" and "OK" again to close the "Local State Properties"
13. Re-boot your machine in normal mode
14. Open Chrome browser and the error should be gone
If you are using XP Professional just follow steps 2-14.