I tried the above but as I expected I got the same result.

pp -o test.exe test.pl
No Perl script found in input

The reason I suspected this would be the case is because as I stated in my original post the command works just fine the way I originally entered it if I move test.pl to the directory where the pp command lives, C:\Perl\site\bin.
If I run pp from that dir I do get a working test.exe.
I would expect a syntax error to fail no matter where you run the command. This look like some sort of a PATH issue but I'm not sure what.

Thanks