First off, exactly where and when are you getting this error? what do you mean when you try to start the terminal? when you use the startbt script or the bt script? Just to verify you have no problems with the android terminal emulator app right?
here are some things to check (all to be run in android terminal emulator):
This directory should exist.. if it does not (no such file or directory error), then create it and a few others with:
If /data/local/bt DOES already exist then run:
mkdir -p /data/local/bt
mkdir sys proc dev
make sure you see the following 4 lines at the end of the mount output:
If these are not mounted you may experience issues like you described.. let me know some more information and we'll go from there.. good luck!
/dev/block/loop254 /data/local/bt ext2 rw,relatime,errors=continue 0 0
devpts /data/local/bt/dev/pts devpts rw,relatime,mode=600 0 0
proc /data/local/bt/proc proc rw,relatime 0 0
sysfs /data/local/bt/sys sysfs rw,relatime 0 0