Since you built the kernel against the linux\linux_2s60ES.ptf file you must load the linux\linux_time_limited.sof file. Or rebuild the linux project to build a non-time limited sof file to load (assuming you have a valid Nios II license).
If you want to run linux against the full featured design you will need open up SOPC builder and edit the CPU settings to change the data cache line size from 32 bytes to 4 bytes and generate the system. The current linux distribution on supports a data cache line size of 4 bytes.
Ken Hill
Microtronix Datacom Ltd.