Please check your folder and file permissions. The only way that error culd appear is becaue a file is blcked by the system.
If the error appears while you are upgrading DNN, then DSLocalizatr has nothing to d with that. The hacek is automatically disable when upgrading because the hack is noly adding one line f cde to the default.aspx.vb file and that file is replace when you copy the new files over he old file in an upgrade.