I think I may have a solution.
I spent the better half of my afternoon looking for a solution to this problem. I recently upgraded to an iPhone 5, but couldn't restore my backup due to my computer no being able to recognize it. I deleted all folders related to anything Apple, I reinstalled iTunes numerous times, I've done everything except reformatting my hard drive. Everything anyone has said on these forums I have tried to no avail. So, by chance, I stumbled upon this link: iOS: Unknown error containing '0xE' when connecting to a Windows PC
The line mentioning USB 2.0 ports lit the bulb in my head. I have numerous USB ports, both 2.0 and 3.0. My phone was plugged into a 3.0 port, so I switched it to a 2.0. All those hours spent scouring the Internet would've been saved if I had thought of that.
My suggestion: If this message pops up continuously, simply switch USB ports and it may just work.