The message
The active version of LiveCycle Designer is not compatible with this version of WorkBench."
Please launch a version of LiveCycle Designer 8.1 or later and make it active, and then try opening your form again -- is correct, but is not-so descriptive, because it does not say that it is the *stand-alone*. Designer 8.1 should be made active and it is not-so obvious to the user.
The steps recommended would be as follow:
1) Log out from LC Workbench server (File -> Log out).
2) Exit LC Workbench (File -> Exit).
3) Using Start -> Programs shortcut Adobe LiveCycle Designer ES 8.1, launch Designer 8.1.
4) In case of having two Designers (8.0 and 8.1), and you launch Designer 8.1, the Check For Default dialog will appear (if Designer 8.0 was set as default/active). The user should click on the Yes button to make 8.1 default (or active). Note that it is recommended to have the Always perform this check when starting check box selected.
5) When Designer 8.1 is launched, go to the Tools -> Options -> Workspace and click on the Set LiveCycle Designer 8.1 As Default button just to be sure to have 8.1 as default. Note that it is recommended to have the LiveCycle Designer should check whether it is the default Designer on startup check box selected.
6) Launch LC Workbench, login and the user should succeed to create new XDP by launching Designer 8.1.
Please note that when updating Acrobat 8.0 to 8.1, Designer 8.0 is getting updated to version 8.0.5 which is also incompatible with LiveCycle Workbench. Only Designer 8.1 that comes with the LiveCycle Workbench is currently compatible.