Incremental compilation and NIOS - Bottom Up

Are you trying to use the .qxp for a design partition containing the entire SOPC Builder system? That is supposed to be supported. However, you might have run into a situation that exists for some IP with license-protected encrypted files. I didn't realize that this situation existed for Nios, but maybe it does. (Darkwave, I saw your post just above right after I posted this.)

Because of the way the licensing protections work for some encrypted IP, you have to provide the original IP source code at the original pathname where the files were when the compile was done that generated the .qxp file. You are still able to get the benefits of the bottom-up flow with the .qxp file. You just have the added hassle of having to provide these source files in the correct location.