In your controller what are you setting template equal to? I find that I can reproduce this error if I remove the project name. For example, I quickstarted a project named 'myproject'. In controllers.py the index method is decorated with:
    @turbogears.expose(template="myproject.templates.welcome")

I can get that error by changing  to this:
    @turbogears.expose(template="templates.welcome"

-- David

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