I don't know what causes your problem, but a little comment: The svnadmin command should point to the main repository dir and not to the db subdirectory, i.e.
svnadmin verify /var/lib/svn/repository
should work -- the error message about the repository format is quite misleading :-/
I don't know what causes your problem, but a little comment: The svnadmin command should point to the main repository dir and not to the db subdirectory, i.e. svn/repository
svnadmin verify /var/lib/
should work -- the error message about the repository format is quite misleading :-/