Hello George,
You can capture the output of the C build process by executing make directly from the command line.
1. Launch Start -> Programs->Altera -> Nios II Development Kit 1.1-> Nios II SDK Shell
2. Change directory to the Release or Debug folder of your project
(depending on whether the configuration setting in the Application Project properties page of the Nios II IDE is set to Release or Debug)
3. make
This can only done after the project has been created and a build attempted in the Nios II IDE, so that files, such as the linker script file, and folders, such as Debug, can be generated by the Nios II IDE.
You can then adjust the properties of the shell by right-click on the window title bar, select properties, then adjust the screen buffer under the layout tab to be large enough to capture the entire output of make. Also, make can be invoked with a verbose-mode flag which will print out the specific commands which are invoked during the build to help you to analyze the problem.
Best regards,
Stephen