Mine said the same thing and here is what I did:
Open Terminal Emulator:
su
mount -o remount,rw -t yaffs2 /dev/block/mtdblock4 /system
chmod 755 /system/xbin/busybox
mount -o remount,ro -t yaffs2 /dev/block/mtdblock4 /system
sync
reboot
You can do this with Root Explorer too. I've never done it with RE, but here are the directions I found somewhere (I copied and kept the directions, but did not seem to include the name of the individual - this is not my work):
“The easiest way would be for you to use Root Explorer and browse to those folders. Set the permissions of busybox to match the other files in that folder by checking all the boxes under "Execute", if you don't want to use terminal to chmod 755 them.”

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