Quartus 7.1 Sp1 and DSPBuilder 7.1Sp1

I am having the same issue using Win2K. I've tried going back to versions 7.1 of everything. Using the FILEMON utility from the systeminternals folks shows a curious behavior. In the Signal Compiler/advanced interface hitting the 'Create Project' button works fine but the Synthesis button spawns a process that looks for a file quartus_sh.exe without success. It starts in the Matlab directory. I've had no useful suggestions from Altera's support people over the past 2 weeks.