Thank you so much for your reply and precious time. I implemented your suggestion and here is the code:

#!/usr/bin/perl
use strict;
use warnings;

# do first level statistical analysis run by run
# go to the directory where the fsf-file for stats 
# and post-stats is stored
chdir  "/mnt/hgfs/ExpAutism/Scripts";

my $infile  = 'Level1Run1_test.fsf';
my $outfile = 'Level1Run1_test_spec.fsf';
my $program = '/usr/local/fsl/bin/feat';

my @subjects = ("SubjectASD203","SubjectTD106C");
foreach my $subject (@subjects){
  open my $fh_IN, '<', $infile 
    or die "Could not open $infile ; $!";
  open my $fh_OUT, '>', $outfile 
    or die "Could not open $outfile ; $!";  
  # replace wildcards with specific titles of subjects
  while (<$fh_IN>){
    s/Subjectx/$subject/g;
    print $fh_OUT $_;            
  }
  close $fh_IN;
  close $fh_OUT;
  system($program,$outfile) == 0
        or die "$program $outfile failed: $?";
}        
print "\n +++ DONE +++ \n";
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The error message on the terminal:  C/usr/local/fsl/bin/feat Level1Run1_test_spec.fsf failed: 2 at Level1Run1_test.pl line 28. The line 28 is  system($program,$outfile) == 0

I am confused again. The problem seems to be with the feat file but what does "2" mean there? Do you have any suggestions?

PS1: The parent folder of each subject folder is /mnt/hgfs/ExpAutismand the parent folder of the fsf and pl files is  /mnt/hgfs/ExpAutism/Scripts

In general, I would not do a chdir from the Perl script and prefer to use a path name. But if you do a chdir, you should check for success.
Did chdir  "/mnt/hgfs/ExpAutism/Scripts"; work? -> check the result of all file system operations.

In general, I've found that changing the running default directory causes more problems than it fixes. Just a thought.

I completely agree that absolute pathnames and writing scripts to be independent of the current working directory is a good thing. In addition to error checking, I'd also recommend using a module to make operations on filenames platform independent (File::Spec, Path::Class, Path::Tiny, etc.).

Unfortunately, external programs aren't always written like that, and may depend on the current working directory (just one example of many would be git). In those cases, I like to use File::pushd to make changes to the current working directory temporary.

die "$program $outfile failed: $?"; ... C/usr/local/fsl/bin/feat Level1Run1_test_spec.fsf failed: 2 at Level1Run1_test.pl ... what does "2" mean there?

See $? and system for the interpretation of values of $?. In this case, it means that the program exited due to signal nr. 2, which normally corresponds to SIGINT, which normally corresponds to hitting Ctrl-C on your keyboard, and which would also explain the C at the beginning of your output (on my system, it shows as ^C).

So it looks like you hit Ctrl-C while /usr/local/fsl/bin/feat was running. If so, why did you do that?

How did "C" get pre-pended in the output:

 
C/usr/local/fsl/bin/feat
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? The assignment was :

my $program = '/usr/local/fsl/bin/feat';
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which should have worked.

If you need the drive letter, use "C:".

                Memory fault   --   brain fried

This is a huge guess here, but I feel that this is due to a #define ENOENT 2 /* No such file or directory */ that may have been encountered.

You may be in a directory that you think you are but aren't, or possibly trying to work on a file from a location where it doesn't exist. Can you change:

system($program,$outfile) == 0
  or die "$program $outfile failed: $?";
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...to:

print -x $program . "\n";
open my $fh, '<', $outfile or die $!;
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...within the exact same code and see if you get an error?