python syntax error in new install

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I installed Titanium Studio on Windows XP. It says the sdk is 1.1.0. I created Titanium Desktop project, checked PHP on. When I run that project get this error:

C:\Program Files\Python\lib\site.py:157: Warning: 'with' will become a reserved keyword in Python 2.6
'import site' failed; use -v for traceback
C:\Program Files\Python\lib\linecache.py:127: Warning: 'with' will become a reserved keyword in Python 2.6
Traceback (most recent call last):
  File "C:\Documents and Settings\User\Application Data\Titanium\sdk\win32\1.1.0\tibuild.py", line 12, in <module>
    import env
  File "C:\Documents and Settings\User\Application Data\Titanium\sdk\win32\1.1.0\env.py", line 1, in <module>
    import app
  File "C:\Documents and Settings\User\Application Data\Titanium\sdk\win32\1.1.0\app.py", line 2, in <module>
    import os, os.path as p
  File "C:\Program Files\Python\lib\os.py", line 754
    bs = b""
           ^
SyntaxError: invalid syntax
New to this so don't know if I have old version of Python, or did something wrong when installing Titanium, or when creating project. Can anyone help? Thx.

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