The error is most likely occurring before this block of code. For example, if I put this block of code in it's own script and echo the aliases lines out:

#!/bin/bash

# example.bash
if [ -x /usr/bin/dircolors ]; then

    test -r ~/.dircolors && eval "$(dircolors -b ~/.dircolors)" || eval "$(dircolors -b)"
    echo "alias ls='ls --color=auto'"
    #alias dir='dir --color=auto'
    #alias vdir='vdir --color=auto'

    echo "alias grep='grep --color=auto'"
    echo "alias fgrep='fgrep --color=auto'"
    echo "alias egrep='egrep --color=auto'"

fi

I get this:

$ ./example.bash 
alias ls='ls --color=auto'
alias grep='grep --color=auto'
alias fgrep='fgrep --color=auto'
alias egrep='egrep --color=auto'

Which indicates that it's fine.

The error is most likely occurring before this block of code. For example, if I put this block of code in it's own script and echo the aliases lines out:

#!/bin/bash

# example.bash
if [ -x /usr/bin/dircolors ]; then

    test -r ~/.dircolors && eval "$(dircolors -b ~/.dircolors)" || eval "$(dircolors -b)"
    echo "alias ls='ls --color=auto'"
    #alias dir='dir --color=auto'
    #alias vdir='vdir --color=auto'

    echo "alias grep='grep --color=auto'"
    echo "alias fgrep='fgrep --color=auto'"
    echo "alias egrep='egrep --color=auto'"

fi

I get this:

$ ./example.bash 
alias ls='ls --color=auto'
alias grep='grep --color=auto'
alias fgrep='fgrep --color=auto'
alias egrep='egrep --color=auto'

Which indicates that it's fine.

Terminating case block

This block doesn't have a corresponding esac.

case "$TERM" in
xterm*|rxvt*)
    PS1="\[\e]0;${debian_chroot:+($debian_chroot)}\u@\h: \w\a\]$PS1"
    ;;
*)

....