Host_Error: IDLLFunctions::DLLInit returned false.

Specs:
Windows XP Service Pack 2
Using mserver(gjail)
Creating Garrys Mod Server
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Whenever I try to start the server, I get the following error:
Host_Error: IDLLFunctions::DLLInit returned false.
Does anyone know what is wrong?

It looks like you either don't have the .dll's needed to operate the server, or they are out of date. Did you try running the update command from command prompt?

Run a update with -verifyall