NiosII error messages

I have a Windows 7 computer with Quartus 10.1 SP1 full version and Nios II Software Build Tools. It is not connected to a board yet. While waiting for my board to arrive, I wanted to do simple things with the software to get used to it. So I created a simple processor system with a CPU, on chip memory and a JTAG. The project generated fine when simulation is unchecked, but I got the following message with the simulation option checked:

Error(10003): Can't open encrypted VHDL or Verilog HDL file "C:/.../simgen_temp_0/cpu.v" -- current license file does not contain a valid license for encrypted file.

I then went on to Eclipse to do a simple Hello world program in C. The project was built successfully. But when I clicked Run as -> Local C/C++ App, I get:

Cannot run program "C:\altera\LearningProjects\FPGA4UTut\software\hello_world_0\hello_world_0.elf": Launching failed

or when I click Run as -> Nios II ModelSim, I get:

Failed Executing: C:/altera/10.1/quartus\bin\perl\bin\perl.exe C:/altera/10.1/quartus\sopc_builder/bin/run_modelsim.pl C:\altera\10.1\modelsim_ase\win32aloem,C:/altera/LearningProjects/FPGA4UTut,demo2 return code: 127

I'm a bit confused with all these errors. Does it mean that I can't do any simulation without having the board?

I have also seen the NIOSII IDE as being more common in tutorials than the Eclipse Software Build Tools. Is it better to use the former?

Thank you very much