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Launcher Pro

After you download you have to install it. Use a file explorer to find the file (Astro is good). It will probably be in a sub folder called download. Open it, the select Open App Manager, then select Install.

Before you do any of that though, you need to go to Settings>Applications>/Unknown Sources and check the box (if you haven't already done that)
 
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...I didn't pay much attention to the message...

^^^Obstacle #1 to solving the problem.

If LauncherPro is installed properly (it might not be if you're getting an error), pressing the Home button should give you the option to use (the standard) Home or LauncherPro. If it doesn't, go to Manage Applications, press Menu / Filter / All, scroll down to Home and select it, then press Clear Defaults. This should work if you're using the Droid with OS 2.1 (as you say in your original message). If you're currently using some other Home replacement, you'll need to Clear Defaults for that app instead of Home.
 
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