FCP Codec not found?

I am opening up Final Cut Pro 7, but when I open it, or click new project, something pops up saying "Codec not found. You may be using a compression type without the corresponding hardware card." I cant edit or do anything without this message coming up. Could someone please explain how to fix this, or if I need to give more information, thanks.
 
I'd try this as a start point.

Delete the User Preferences
You can resolve many issues by restoring Final Cut Pro back to its original settings. This will not impact your project files, but you should verify your Scratch Disk location setting after doing this. To reset your Final Cut Pro user preference settings to their original state, do the following:

In the Finder, go to ~/Library/Preferences—the tilde (~) represents your Home folder.
Remove the "com.apple.finalcutpro.plist" file from the Preferences folder.
Remove the "Final Cut Pro User Data" folder from the Preferences folder.
 
Start with what you have established as your sequence settings, and what codec for your video.

and trash your Final Cut Pro preferences files as well.

Finally, give detailed hardware and software specs, OS, etc.
 
Ok I tried to trash the preferences and the com.apple.finalcut file but it still gives me the same error.
Here are some details to know-
-My friend gave me his powerbook G4 which had final cut studio on it. It is too slow to run final cut on it, so I transfered just Final Cut Pro 7 to my iMac, which I have been using with FCE over the past year.
- My iMac has a 2.4 GHz intel Core 2 Duo processor, the memory is 1 GB 800 MHz DDR2 SDRAM
- I set the scratch disk to both the internal drive, and my external drive, but still get the same error.
- In easy setup the only way the message does not appear is if I set the format to NTSC. Anything else such as HD, HDV, DVCPRO, the codec not found message appears.

Before typing this I found out that it only works with the format set to NTSC. I am shooting with a canon 60D, and I put some footage that is 1080 30p. Will having the format NTSC make it HD in Final Cut, or is NTSC a basic format and make it standard def?

I am very new to all of this still, so any directions/advice etc. would be awesome, thanks!
 
-My friend gave me his powerbook G4 which had final cut studio on it. It is too slow to run final cut on it, so I transfered just Final Cut Pro 7 to my iMac, which I have been using with FCE over the past year.

So did he give you all the original FCS install disks as well, and transfer ownership?
 
-My friend gave me his powerbook G4 which had final cut studio on it.

It is too slow to run final cut on it, so I transfered just Final Cut Pro 7 to my iMac.

When you registered the transfer of license with Apple, did the company provide verification of the license transfer?

I'm also having issues with your post. FCP 7 requires an Intel Mac to even install. It won't run on PPC computers.

Can you explain what is going on, because sounds like you copied over FCP to your iMac, and did not install it from the licensed original discs.

Help us out.
 
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