This issue occurs when the ISim engine or compiler crashes. There are multiple causes for this issue, and most of them are addressed in the latest service pack (sp3) of 10.1. If after upgrading the software you still see this problem, you can try the following.
1) Clean up project files in Project Navigator.
2) Open the task manager and see if the executable file created by Fuse has not stopped from the previous run. By default, the executable is named .exe or X.exe. If this .exe file is still running, please kill it and rerun the simulation in ISim.
3) Please open a web case with Xilinx Technical support and provide the test case so that Xilinx can find a fix or workaround for this problem.