BuddyPress.org

One more bit of confusion here:

The readme states

VERY IMPORTANT: If you are no longer using the old two-theme system from BuddyPress 1.0, please make sure to delete your /wp-content/bp-themes/ folder to activate the new one-theme setup.

This conflicts with the error message, which says to move the new theme files to the folder that the readme tells me to delete.