Thanks for the tip, Scott. I managed to get the lyx 2.0.3 working but I'm still getting that error Package keyval Error: hash undefined. Also, after I revert back to bibtex8 (by changing to backend=bibtex8 in the preamble and changing to Bibliography generator bibtex8 in Document setting) lyx won't process the bibliography. It doesnt give an error, it simply runs through and then gives a document without ref. list with the refs. in bibtex code format. To fix it I have to delete the \bibliography{} line in the preamble and then put it back.
Any ideas why that it happening? The other problem I have that my references under bibtex8 look wrong. my preamble line is: \usepackage[style=authoryear,natbib=true,backend=bibtex8]{biblatex} but the document output looks like this ...make up as much as 44% of the land surface Verstraete and Schwartz(1991) instead of ...make up as much as 44% of the land surface (Verstraete and Schwartz 1991) as I would expect and as is shown in: http://wiki.lyx.org/BibTeX/Biblatex#using-biber Any suggestions will be more than welcome Roey