That's either Windows 7 SP1, or Windows 2008 SP1, correct?
This is not a supported version of SQL Anywhere on Windows 7/2008. EBF 126.96.36.19924 or higher must be installed - see: http://www.sybase.com/detail?id=1023009#footnote_4
You can download the Windows x86 188.8.131.5251 EBF here.
What happened to this database the last time it was shut down such that the database needs to undergo recovery? Did the computer lose power?
The error code 38 is the Microsoft Windows system error. The command:
It sounds like the database file (database.db) is actually corrupt and the file system metadata on disk that provides the length of the file does not match the actual length of the database file on disk. This can happen in some particular power-loss scenarios or with some disk drivers that do not properly flush data to disk (See: http://dcx.sybase.com/index.html#1201/en/dbprogramming/server-deploy.html*pg-deploy-windows-registry-entries ).
There are also possible ways to salvage the corrupted database, but it's likely that you will lose data. If you wish to attempt this, you should contact Technical Support. (Note: for this specific scenario, it may not require a full salvage engagement).
Aside: Microsoft is also aware of a general metadata disk flushing problem / 'torn writes' and is attempting to address some of these issues in their enhanced file system, ReFS. Read more about this file system here: http://blogs.msdn.com/b/b8/archive/2012/01/16/building-the-next-generation-file-system-for-windows-refs.aspx