This appears to be an issue with the make process trying to copy things to the root directory of the c: drive in violation of security permissions. I forced the creation of "c:\Active.css" and tried again then failed on the next file dmake wanted to copy - this is Windows saying "I can't create the file so I'll tell the user it doesn't exist." Technically it's true but it's not the root cause.
I suspect there's an installation error with Inline::C since I didn't use Activestate PPM. I just downloaded the Inline-C tar.gz file from CPAN and copied the "C" folder from there under my perl\site\lib\Inline folder. I'm generating C code in the temporary _Inline folders but something is not correct in some destination path somewhere. Still looking (and listening for someone to tell me where I've been silly!).