It means you've got an error in descr_strat before the end of the second factions listing. When the game hits an error in descr_strat it stops reading everything below that point in the text file - so it thinks you haven't got two factions! (did the show err message give a line number before the 'expected faction'? - if so look there)

A number of mistakes will do this - common one is trying to use a 1.2 descr_strat that has the 'win conditions' section below the playable factions for a 1.3 or above patch (as game no longer recognises that section). Lots of other errors can do it just having one odd character at beginning of line or a comment that lost its ';' will do it.

If you can't spot it upload your descr_strat somewhere e.g.
http://www.megaupload.com/
and post the link here so we can have a look.