Thinking that this might be some weird sort of 32/64 bit issue, ...

I can't reproduce your errors using AS1004 Perl 64-bit running under Vista 64-bit.

#! /usr/bin/perl -slw
use strict;

print "About to try fail 1";
my $testfile = "test.exe";
my $test = "/C ${testfile} localhost root pwd";
system ("cmd", $test);

print "About to try fail 2";
$test = "${testfile} localhost root pwd";
system ($test);
[download]

In the following test.exe just displays its args:

c:\test\test\test>test.pl
About to try fail 1
0 : test.exe
1 : localhost
2 : root
3 : pwd

About to try fail 2
0 : test.exe
1 : localhost
2 : root
3 : pwd
[download]

In the first case Perl starts cmd.exe, which runs test.exe. In the second, perl runs test.exe directly. No error messages are produced by either.

What version/build of Perl are you using?