This error will occur when activating a feature containing a module if you prefix the "Url" attribute value of the "Module" element with a slash:
<?xml version="1.0" encoding="utf-8"?>
<Elements xmlns="http://schemas.microsoft.com/sharepoint/">
<Module Url="/_cts/FOLDER" Name="Modules">
<File Path="ModulesTemplate.dotx" Url="Template.dotx" />
</Module>
</Elements>