I've had that error before, but I don't know how to fix it, it kinda fixed itself or something. I can only suggest that if it persists, to go to blizzard.com. They have a list of common problems and solutions for them somewhere, you might find it there.
Nubli is right i had the same problem, reinstall, and it fixes itself... also its proboably an outdated cd-rom, my 95 does that but my Dell Dimension 2400 doesn't
Either your target '"C:\Program Files\Diablo II\Diablo II.exe" -w' is messed up/ added some weird lines) or you loaded a program/hack/plugin that messes up your game.