Eclipse/Pydev "Execption occurred executing command line" error

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http://www.saltycrane.com/blog/2007/01/eclipsepydev-execption-occurred/

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Eclipse 3.2, PyDev 1.2.5 error:
Execption occurred executing command line.
There is a problem with your Python interpreter. To fix, go to "Window", "Preferences", "Pydev", "Interpreter - Python", and make sure your python interpreter is set up correctly.