I found out what the problem was. vcvars.bat contained corrupted file
paths for some reason. Might have been the spaces in the directory names
maybe?
 
 
I had 
MSVCDir=C:\PROGRA~1\MICROS~4\VC98
 
MSDevDir=C:\PROGRA~1\MICROS~4\Common\msdev98
 
Instead of 
 
set MSVCDir=C:\PROGRAM FILES\Microsoft Visual Studio\VC98
set MSDevDir=C:\PROGRAM FILES\Microsoft Visual Studio\Common\msdev98
 
 
Thanks for the advice :-)
 
Steve 
 
 
 
 

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