After a whole lot of digging I was able to figure out what the problem was. I had to do two things:
1) Copy over jtag_client.dll and dinkum_alt.dll from "QUARTUS_ROOT_DIR\quartus\bin" to the Control Panel software folder.
2) Add the following two directories to my windows system PATH variable:
C:\altera\10.0\nios2eds\bin C:\altera\10.0\nios2eds\bin\nios2-gnutools\H-i686-pc-cygwin\bin Step 1 was courtesy of Terasic's tech support and has now been added to their technical FAQ webpage. Step 2 I figured out on my own and essentially consisted of having to go through each script and running them all manually until I figured out where they were failing.
I have no idea why it is that some people have to do this fix and some people don't. Some people have no problems at all. Weird. Just FYI, my system is Windows 7 64-bit running Quartus and NIOS II EDS v10.0.
Hope this helps someone in the future.
Pz!
Jonathon