Hello Kris,
The reason you are seeing the error is because you are trying to use the same subnet for the fe0 interface and the vlan interface.
Usually the switch ports are used to connect hosts together and the fe0 port is for WAN connectivity. Therefore, I recommend you use the 8 ports on the switch for your hosts, by removing the ip address off the fe0 and placing it on the vlan interface. You could also place the 2950 onto one of those switch ports as well.
However, if you really need that extra port you can configure a bridged virtual interface and assign it to the vlan and the fe0 port. However, I do not recommend doing this as i've had a few problems in the past with customers trying to do this.
Let me know if you still want to do the BVI thing, otherwise try to stick with switchports for all hosts.
Thanks,
Michael