Here are a few other things that could cause emulator install issues:
Does the student have BlueStacks loaded on his computer? BlueStacks is a stand alone Android emulator; when it is active on a PC it interferes with the stock Android Simulator.
Are all the student's using school PCs with Windows 8 and using the emulator without issues? If so, how is this student's PC different? For instance, does he have a Chromebook or a tablet PC? You did in fact follow the instructions here
http://appinventor.mit.edu/explore/ai2/setup-emulator.html . Did you do this step
f this is the first time you are using the emulator after installing the App Inventor Setup software, you will see a message asking you to update the emulator. Follow the directions on the screen to perform the update and reconnect the emulator. ? Just checking because it is very easy to miss a step and the emulator can be fussy.
The screen shot you provided indicates the emulator if 5554:<build> and has a blue margin. That probably indicates you are in fact using the emulator that comes with App Inventor.
The error occurs while the student is attempting to load a Project. I wonder if the same error message would appear when he/she does a Connect>Emulator if you tried a different Project. Perhaps make a new, very simple Project. Call it newTest. Place a button on the Designer screen. Don't do anything else. Now do Connect>Emulator and see what happens. Sometimes magic works, this might work if the emulator issue is related to the Project-a shot in the dark.