When using Win XP in your native language, the path to the material library may contain unsupportet characters, at least that´s the case on a Danish Win XP / Revit 2011 installation:

C: \ Programmer \ Fælles filer \ Autodesk Shared \ Materials2011 \ assetlibrary_base.fbm

The solution:

Copy the folder C: \ Programmer \ Fælles filer \ Autodesk Shared \ Materials2011"

to a new folder without the use of the unsupported charachter C: \ Programmer \ Shared Files \ Autodesk Shared \ Materials2011

Change the following in the RegEdit:

32bit HKEY_LOCAL_MACHINE \ SOFTWARE \ Autodesk \ ADSKAssetLibrary \ 2011 - LibraryPaths

64bit HKEY_LOCAL_MACHINE \ SOFTWARE \ Wow6432Node \ Autodesk \ ADSKAssetLibrary \ 2011 - LibraryPaths

So it points to the new folder: C: \ Programmer \ Shared Files \ Autodesk Shared \ Materials2011 \ assetlibrary_base.fbm

Credit for this solution goes to Fragel