When I updated to latest Node Red version (0.18.7), I noticed that some refactoring is required in node red bluemix starter.
The application will detect there is any cloudant storage attached to it and fallback to local storage if there is none, then in index.js the application will load the corresponding storage module. For the fallback case, since Node Red has updated the localfilesystem storage module and require a new "runtime" parameter (for the newly added project feature), the application will fail to instantiate.
This can be fixed by adding runtime parameter to line 36.
var runtime = require('./node_modules/node-red/red/runtime');
storage.init(settings, runtime).then(storage.getSettings).then(function(runtimeSettings) {