It's a deprecated command. Microsoft removed the "truncate_only" option from SQL Server.
Microsoft recommends changing the recovery model to SIMPLE instead of using "no_log" or "truncate_only."
Attached to this KB Article are 2 SQL Queries. These will create 2 backup jobs, one for the Database and one for the Transaction Log file. These two backup jobs will be run at 1am each evening every day.
Run each query against the master database. This will create the backup jobs. You will need to insure that the SQL Agent is running for these scheduled jobs to run.
Note: These scripts will perform a NOINIT when backing up which translates to "Append to the existing backup set".
Note: If these procedures do not meet your organizations needs then you can create on your own a backup job using SQL Management Studio that better suits your needs. These are merely work arounds until this is corrected.