The external pull-ups are necessary for communication via I2C bus.
ERR_BUSY means, that the slave device doesn't respond by an acknowledge. This may be caused either by pull-up missing on the line or by an incorrect slave address.
More detailed information about Sendchar() and SelectSlave() methods can be find in the help of the I2C bean on page Methods (in the pop-up menu of the I2C Bean).
Please specify what type of the demo board you are using. This information is missing in your issue.
For example:
External pull-up resistors for SDA and SCL lines are enabled by default on the DEMOQE128 board. Please see the 8.7 section in the user manual of the DEMOQE128 board.
Weblink to the user manual of the DEMOQE128:
http://www.freescale.com/files/microcontrollers/doc/user_guide/DEMOQE128UM.pdf?fpsp=1Processor Expert Support Team
www.processorexpert.com