What does the statement in the Talmud mean, that Moshiach will come in either a generation that is completely righteous or one that is completely guilty?

The first condition, a "generation that is completely righteous," sounds reasonable enough.  However, what does the second part of the statement mean?  How will the Moshiach come in a "generation that is completely guilty"?

The tendency to sin comes from the spirit of impurity and evil in the world.  These powers have been in the world since creation.  However, in the beginning they were isolated; there was no contact between the forces of good and the forces of evil.  Had the situation remained this way, there would be no impulse to do wrong, since it would be obvious how destructive it is to sin.

When Adam and Eve ate from the tree of knowledge, they caused an intermingling of the powers of good and evil.  Every evil absorbed some spark of goodness, while all good became tinged with a taint of evil and selfishness.  This slight evil that crept into the most holy areas prevented it from reaching its completion.

The Redemption will come when all traces of evil will have been removed, and goodness will be refined to the point that there is no trace of evil left.  Then there will no longer be the urge to sin.  Once we are no longer in the grip of the evil inclination, the powers of impurity will lose their power, and the world will be ready for Redemption.

There are two ways that this separation can take place:  Either in a generation that is completely righteous or one that is completely guilty.  In either scenario, one force has completely overtaken and engulfed the other.  The ideal situation would be if the evil would be removed altogether and only the goodness remain.  However, even in the worst scenario, a "generation that is completely guilty," the separation of good and evil will have been accomplished, and G-d will have to bring the Redemption to allow the world to have a continued existence.

(Maamarei Admur Hazaken, p. 403.  Torat Menachem 5747, vol. 2, p. 627)