Failed to create process: Access is denied error

[DavidClarke]

I'm using
Windows 8.1
Visual Build Pro 7.7a
Visual Studio 2010 SP1
Visual Studio 2012 Update 4

I created a brand new VS2012 C# forms project and do not any any controls or code; I compile it with no errors. Then I create a new build script (VBP) and use the “Make VS.NET” task to build the solution. I do not select any extra options on the build step. Run the build script and I get the error:
Failed to create process: Access is denied.

I have set VS2010/VS2012/VBP all to run as administrator and additionally VBP is set to Windows 7 compatibility. I am admin on my PC and I also have completely disabled the UAC (in registry too) and granted users full rights to the VS application folders.

After enabling diagnostic logging (VBP) I see this:
Command: "\"c:\Program Files (x86)\Microsoft Visual Studio 10.0\Common7\IDE\devenv..com" "C:\Storage\Test Programs\TestingBuildScript\Testing\Testing.sln" /build "Debug|Any CPU"

Notice how there is an extra "." character in "devenv..com". If I run this command on a command line it works IF I remove the extra "." character. I also noted that VBP tries to build using VS2010 version of "devenv.com". This may be normal but not sure.
If I create a new project using VS2010 everything works fine in studio and VBP. In this case the command logged shows a single “.” character as it should.

This error seems to happen with all VS2012 projects. This is a new PC so VS2010/VS2012/VBP were all freshly installed.

If I add my credentials to the "Advanced" tab on the step I get this error:
Failed to create process: The stub received bad data.

I have a strong feeling the command is being formatted incorrectly (with the extra "." character) but I cannot find where this is done. Any suggestions???