What I did was to extract the PluginAPI to my Rising World folder (not the plugins folder). Tried running the singleplayer servers again and got the same message, even with a fresh install of everything.
Next, I tried extracting the javadoc.zip file that appeared with the PluginAPI, but it didn't fix anything.
Here's what my files look like, in case something looks obviously wrong to you. I used WinRAR to open the PluginAPI.jar, and just as the error message says, couldn't find a plugin.yml in there anywhere. However, I was getting this error even before I upgraded from the previous PluginAPI version, so I'm kind of lost as to how to fix this.
Currently, I can't play singleplayer at all anymore.
I just remembered after Red released the NPC update that I had problems with starting the game. I had to do a windows update to pick up a recent update..... once that happened Rising World played OK.
You may want to check you have Windows Updated to date.