If you receive a Bad Data error when working with DotNetNuke, the problem seems to be with cookies. The solution is to clear the cookies from your computer, and that should take care of the problem. It worked for me when I encountered the error. There is a discussion on this at http://forums.asp.net/975037/ShowPost.aspx, and one of the core team members has a code workaround.
After I cleared my cookies, I changed the name of the FormsAuthentication cookie in my web.config, and the problem has not happened again.
I run DotNetNuke in my main directory (www.rjdudley.com), and have dasBlog set up as a separate application in a subdirectory (www.rjdudley.com/blog). This error arose after I had logged into my blog site and edited posts or other admin functions, and then tried to log into my DNN portal. If I manually removed the single cookie for my site from my cookies folder, I could log in with no problems.
Even when I tried setting the path attribute of my forms tag in the web.config for dasBlog, I still got this error.