Here's the error exactly:

Things I've noticed:
I do *NOT* get this error when I'm building .XC or .XE files.
This has been happening since before the tools for the XK1 board came out, (I think 9.7.something was the first time I used XMOS environment) I figured that when I updated, the problem would go away.. not so much! :/
I do *NOT* have any problems when doing a Run As -> XCore Application but only if I've first run the Build.
I *DO* have the same problem when Writing to Flash memory, same exact error. But it does finish saying:
SPI flash programming completed successfully.
Building flash images...
But it gets stuck there, the last thing that's printed is "building flash images...", then I need to unplug the board, and plug it back in (for a reset, I'm guessing?), only after the reset, the program starts running.
(this is not the case when running as a XCore Application, it starts instantly after it gets done building)
I'm running XP SP2.. using the XK-1 board. (I get the same problem when trying to build other projects on other boards) Uh, what else.. I think that's it! If there's any more information you need to help figure this out, or some ideas on where I can go for information, would be much appreciated!
Also:
I use Virtual Drives, so I figured this was a culprit.. but after disabling them, error still occurred.. even after uninstalling them completely with a reset and all, still getting the problem.
I can still get the board to work fine! (but it's a pain in the ass doing it!:D)