Also make sure that the url for your site defined in webwork2/conf/site.conf is exactly correct (in particular it uses http -- if that is what you use to connect or https if that is what you use -- switching between the two can cause errors such as you describe).
Can you tell me the url of the server and course you are using when you get this error? Have you looked in the error console report given in View->Developer->DeveloperTools in the chrome browser (firebug in the Firefox browser, and a similar developer tools name in Safari)? This lists javaScript errors that occur -- and that is the kind of error you are getting when attempting to access the Library Browser. The error messages there may give some clue.