Error with R2008b compiler, mcc

The build process seems to go fine until it tries to shell out to mbuild. It is reporting an error with "cmd" (see output below). Can anyone tell me what the problem is?

--> mt.exe -outputresource:"C:\SAS\ENGINE~2\BLOOME~1\PROJEC~1\VERSIO~1\TEMPWO~1\TRY4_REJ\SRC\Try4_rej.exe";1 -manifest "C:\SAS\ENGINE~2\BLOOME~1\PROJEC~1\VERSIO~1\TEMPWO~1\TRY4_REJ\SRC\Try4_rej.msvc.manifest" 

Microsoft (R) Manifest Tool version 6.0.4071.0  
Copyright (c) Microsoft Corporation 2004.   
All rights reserved.  
'cmd' is not recognized as an internal or external command, 
operable program or batch file. 
Error: An error occurred while shelling out to mbuild (error code = 1). 
Unable to build executable. 
??? Error using ==> mcc
Error executing mcc, return status = 1.

There were errors during compilation process.

[Kaustubha Govind]

What happens when you run "!cmd &" (without the quotes) from your MATLAB prompt?

[Joseph]

The "!cmd%" command does open a Windows Command prompt window with that same error on the top followed by the command prompt (see below). This command shell/window behaves normally.

'cmd' is not recognized as an internal or external command,

operable program or batch file.

C:\Program Files\MATLAB>

[Joseph]

As noted above, MATLAB seems to open the Command Prompt but does report the error (same error as seen during mcc execution). Is it possible that MATLAB is getting an error code and then stops even though the command prompt opens?