That file (libraries/facebook.php) is definitely required by the login module and many other JFBConnect related functions, but only is only included in the 3.0 version of the component. The 2.x version did things differently.
What versions of both the module and component are you using? If it is 3.0, can you try uninstalling and reinstalling (your settings will be saved). If that doesn't work, please let us know and we may need access to your site to debug and fix the issue.
Thanks!