(I see, thanks emendelson, this wasn't obvious to me.)
Apparently the message appears in OS9 when you try to open the application. Note the bizarre "zero K needed".
How did you transfer the application into the emulated machine?
Applications cannot be opened from the shared folder (Unix disk) and you will see a message like this when you try. An application must reside on a disk image volume that is mounted in the emulated machine. COI comes with three additional image files that can be used for this purpose when present in the /Users/Shared/ folder. You best copy the file inside the emulated machine from "Unix" to the other volume.