Unfortunately the 1048 error message isn't very descriptive. My suggestion would be to try running the examples that come with LabVIEW and see if you have the same problem. They can be found under Help >> Examples >> Communication >> Importing Matlab Script. Both of these have outputs, one uses an input.
I ran these using LabVIEW 6.0.2 and Matlab 6.1 without any problems.
Also, to be on the safe side, I would keep all variable names lowercase (both in the Matlab script and in the input tunnel to the script node). Be sure
to avoid naming variables that are reserved words.