I cannot reproduce this on my system, but I researched this error and it seems that it will fail in the following situations;
- Invalid command/Incorrect path - but you confirmed that this is ok
- Permission/Access error - Possibly caused by anti-virus or Windows itself
I can only think that is a permission error, another test would be to try and run a program that was not located in program files e.g. C:\temp and see if you get the same results.
Alternatively, what I do is run the simulator once, and every time you export the project the simulator will automatically prompt you that changes have been made, rather than closing the simulator and rerunning it each time.