It's been a while since I've used Cygwin, but I seem to recall having to quote the whole darned path to the executable if the path had spaces in it:
<verbatim>   "C:/some darned path/with "C:/quoted

IIRC, the last time I was using Cygwin (on a NT5 box in 2003) the only way I could rely on an exe "just running" was if I put it into the command32 (or whatever it's called) "folder"&#8212;putting it into the Cygwin bin dir didn't work consistently.  I finally ended up dumping Cygwin and getting win native versions of bash, less, and a few other GNU progs.