Duplicate post on BioStars, http://www.biostars.org/p/87226/#87399
This appears to be down to a subtle change in the EMBOSS output. You have an extremely old version, EMBOSS version 2.10.0 (February 2005), and your output file has lines like this:
gag 1288 -------------------------------------------------- 1287
Using a newer version of EMBOSS (e.g. 6.3.0), gives lines like this:
gag 1287 -------------------------------------------------- 1287
The Biopython parser is expecting the latter for alignment sections with no letters (e.g. when one sequence is much longer than the other), where the start and end coordinates agree. Please update your copy of EMBOSS, and then the parser should be happy. The current EMBOSS release is version 6.5.0.