I tested the example you supplied using Harlowe v2.1.0 in both the web-browser based release and the desktop application based release of the Twine 2.x application, and it worked correctly for the Test / Play / Publish to File options.
However I did get the same error message if I tried to use your example with the Harlowe v1.2.4 story format, are you sure you have Harlowe v2.1.0 selected for your Story Project?