Is it posible that you saved the system.ovr file with a .txt extension? It's an easy mistake to make since Windows "hides extensions for known file types" by default. Right click on system.ovr and go to properties. Under "Type of File:" it should say "OVR file (.ovr)"
I'm having the same problem, but in my case I DO have the right extension. I used the file included in the zip. It's in the NCsoft/Aion folder, just where it should be. I've logged and relogged about 10 times, both with KDM offline, and with it online. The game isn't creating the file no matter what I do, and I can't figure out why. :confused: