Thanks Bruce.
1) I'm getting this error in my dev machine.
2) I tried deleting the web folder and recompiled the web app. While recompiling I noticed a dos (black) screen doing some work (most likely creating web folder under my app folder). The program compiled fine, but the "Update of web folder required is still showing up. This time the server version is 6.52 and the web folder is 6.54.