Odd problem compiling on XP Home

When I try to compile a project located on another machine in VC++ v7.1 it
compiles perfectly when the compiling machine is running Windows Server
2003. However, if the compiling machine is running XP Home I get the errors
shown below. Any idea what the problem is:

Creating temporary file
"i:\Work\Ai- Logix\SmartWORKS\Examples\GenerateStereo
\Debug\RSP000003.rsp"
with contents
[
/Od /I "C:\Program Files\Ai-Logix\SmartWORKS\Inc" /D "WIN32" /D "_DEBUG" /D
"_CONSOLE" /D "_MBCS" /Gm /EHsc /RTC1 /MLd /Yu"stdafx.h"
/Fp"Debug/GenerateStereo.pch" /Fo"Debug/" /Fd"Debug/vc70.pdb" /W3 /c /Wp64
/ZI /TP
".\mtutil.cpp"
".\GenerateStereo.cpp"
".\Channel.cpp"
".\Board.cpp"
]
Creating command line "cl.exe
@"i:\Work\Ai- Logix\SmartWORKS\Examples\GenerateStereo
\Debug\RSP000003.rsp"
/nologo"
Creating temporary file
"i:\Work\Ai- Logix\SmartWORKS\Examples\GenerateStereo
\Debug\RSP000004.rsp"
with contents
[
/Od /I "C:\Program Files\Ai-Logix\SmartWORKS\Inc" /D "WIN32" /D "_DEBUG" /D
"_CONSOLE" /D "_MBCS" /Gm /EHsc /RTC1 /MLd /Yc"stdafx.h"
/Fp"Debug/GenerateStereo.pch" /Fo"Debug/" /Fd"Debug/vc70.pdb" /W3 /c /Wp64
/ZI /TP
".\stdafx.cpp"
]
Creating command line "cl.exe
@"i:\Work\Ai- Logix\SmartWORKS\Examples\GenerateStereo
\Debug\RSP000004.rsp"
/nologo"

Output Window
Compiling...
cl : Command line error D2022 : cannot open
'i:\Work\Ai- Logix\SmartWORKS\Examples\GenerateStereo
\Debug\RSP000004.rsp'

Results
Build log was saved at
"file://i:\Work\Ai- Logix\SmartWORKS\Examples\GenerateStereo
\Debug\BuildLog.h
tm"
GenerateStereo - 1 error(s), 0 warning(s)