Due to a problem in the Quartus® II software version 11.1 SP2 and earlier, you may see this error when compiling a design targeting a Cyclone® III device. This error may occur if the Auto RAM Block Balancing option is enabled in your Quartus II Settings File (.qsf):
set_global_assignment -name AUTO_RAM_BLOCK_BALANCING ON
Note that this is the default value for this assignment.
To work around the problem, turn off the Auto RAM Block Balancing option using the assignment below in your .qsf:
set_global_assignment -name AUTO_RAM_BLOCK_BALANCING OFF
This problem is scheduled to be fixed in a future release of the Quartus II software.