Due to some unknown reasons Windows XP started throwing the error below whenever I tried to empty my recycle bin, I was sure that the recycle bin folder structure got corrupted somehow and after tinkering here and there I was able to fix this annoyance pretty easily as shown ahead.

To get this fixed all I did is to get rid of the hidden recycler folder using rd /s c:\recycler command in Windows command-prompt - this will delete all contents of the recycle bin fixing the error.

This will probably leave the recycle bin icon to show filled state, to fix this simply disable and re-enable recycle bin (Right-click Bin Icon -> Properties- > Do Not move files to recycle bin - click apply and then de-select the checkbox to enable recycle-bin again).