How can I fix the error "GUI framework cannot be initialized" with TeXnicCenter and MiKTeX?

This is a known issue with MiKTeX 2.8. From the MiKTeX 2.8 issues website:

TeXnicCenter compatibility

LaTeX terminates with "GUI framework cannot be initialized" if invoked from TeXnicCenter (1.0 Stable Release Candidate 1). This happens when a missing package needs to be installed and the pop-up window cannot be displayed.

Remedy: start MiKTeX Options and choose either Yes or No (but not "Ask me first") for the option "Install missing packages on-the-fly".

If No is the only option that works, I would suggest updating to MiKTeX 2.9. This is something that you would probably do in the future anyway.

For me the MiKTeX's "Install packages on the fly" solution didn't work. What did work was to run latex once from command line (cd to the directory, then run "latex myfile.tex"). This way the GUI won't be interfering with package installation. Afterwards you can compile normally from TeXnicCenter, as you now have the packages installed.