When you need to put a data binding reference inside a control attribute you need to put it in single quotes. It seems like an odd requirement, but that's what it takes:
<asp:DropDownList AutoPostBack = True id = "DD" DataSource='<%# BindTheError(DataBinder.Eval(Container.DataItem, "c_transformstatus")) %>' DataTextField="c_levelname" DataValueField="c_transformstatus" Runat =server />
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Peter