The apktool folder has to be in the root of your sd card. I was able to successfully decompile and recompile my framework-res.apk with no errors.
Download the archive apktool4.0_armhf.zip from http://code.google.com/p/apktool/downloads/list
Download the updated apk file Apktool4.0.apk as well
Extract/unzip archive to /sdcard/apktool
Install the updated Apktool4.0.apk
Open app from app drawer, and have fun using it!
So please try this out, and let me know what you think!