It specifically related to older versions running on 64 bit windows, seems they only populated the 32 bit directories on some versions of the ISE. I was on xilinx website earlier today, and happened to glance at an 'errata' that stated some versions of Xilinx accidentally shipped WITHOUT the correct 'exe' files for simulation. Your setup is not 'setup' correctly, the shell program is expecting to find an external 'exe' in a specific location, but it is not where it should be.
