This error message occurs when you declare a string type with more than 255 elements, if you assign a string literal of more than 255 characters to a variable of type ShortString, or when you have more than 255 characters in a single character string. 

Note that you can construct long string literals spanning more than one line by using the '+' operator to concatenate several string literals.

program Produce;
var
  LongString : string[256];  (*<-- Error message here*)
begin
end.

In the example above, the length of the string is just one beyond the limit.

program Solve;
var
  LongString : AnsiString;
begin
end.

The most convenient solution is to use the new long strings - then you don't even have to spend any time thinking about what a reasonable maximum length would be.