Hi deb,
I had exactly the same issue with my newly arrived Cyclone V Dev kit.
I was a bit confused as to whether Version 12.1.1 meant Quartus V12.1 with sp1.
Anyway, I tried
Kit Installation 12.1.1 with Quartus 12.1 sp1 - didn't work - similar message to yours
Kit Installation 12.1.0 with Quartus 12.1 sp1 - total failure
Then I followed the procedure in the quick start menu ("Step 3") to load and run the BTS from the Kit Installation 12.1.1 files.
It all looks good now, the BTS runs.
I think the board and software was probably all ok, it was just that I had not realised that the DEV board boots to run the portal application(D25 lit on my board),
not the BTS application.
The BTS needs the PGM_SEL button pressed and then PGM_Config to select and run the BTS application, D26 lit on my board.
The Portal and BTS apps seem to be mutually exclusive.
I havn't explored the D27 lit application, if any, yet.
Summary ( for my Cyclone V Dev kit )
Kit Installation 12.1.1 with Quartus 12.1 sp1 + loading and running the BTS app from the 12.1.1 kit files as per quick start guide works.
The loading may have been redundant.
BTS does not run at power-up, it has to be selected by PGM_SEL and run by PGM_Config
Cheers, Steve