Hi Ruel,
It looks like you need to set the NIS workspace within the Nautical Properties before running the Populate process. To do this:
1. In ArcMap, go to Customize > Production Properties
2. Click on the Nautical Properties item
3. Under the Central Database Repository section, click in the "Click to edit property" and click on the ellipses button
4. In the browse dialog, navigate to the location of your NIS workspace, select it and click Open
5. Click OK to save your property settings and close the dialog
If you don't have an NIS workspace go to the Help and search on the topic "Setting up the NIS database". Follow the steps outlined in this topic. Hope this helps.
Andy