Hy,
I got this error when retrieving a fresh copy from a darcs rep. As this rep is
open you can test yourself:
$ darcs get http://code.haskell.org/~dons/code/hmp3
Copying patch 407 of 407... done.
Applying patch 1 of 407... darcs: bug in darcs!
Impossible case at PatchRead.lhs:58 compiled 10:52:06 Jul  7 2007
Please report this to bugs@darcs.net,
If possible include the output of 'darcs --exact-version'.

$ darcs --exact-version
darcs compiled on Jul  7 2007, at 10:54:44
# configured Sat Jun 16 09:59:48 PDT 2007
./configure /usr/local/share/config.site /usr/local/etc/config.site

Context:

[TAG 1.0.9
Tommy Pettersson <ptp@lysator.liu.se>**20070603213706] 

I hope this helps to improve darcs!

Greetings
-- 
Dominik Bruhn
mailto: dominik@dbruhn.de

Hello Dominik,

Thanks for the report. However, as you can see for searching for "Impossible
Case"  in the bug tracker, this issue is already known and resolved in the
unstable version of darcs:

http://bugs.darcs.net/issue?%40columns=id%2Cactivity%2Ctitle%2Ccreator%2Cassignedto%2Cstatus&%40sort=activity&%40group=priority&%40search_text=Impossible+case+at+PatchRead.lhs%3A58+&submit=Search

I submitted a patch to update the documentation to make clearer that we
recommend searching for duplicates before submitting a new bug report. 

Thanks,

   Mark