Do you get the error if you do perl test.pl > test.out? I wonder how solid is Windows ability to accept commands that aren't .exe, .com or .bat.

What if you do it in a directory other than a root directory? Unlike subdirs, root dirs in a FAT system have a fixed size. When one tries to create too many files in the root directory, one gets an "out of disk space" error.

Does the directory referenced by %TEMP% exist? Is that drive full? How about %TMP%? Is your main drive full? Maybe something is trying to create a temporary file.