I know this might sounds silly but given that I have two emacs, one installed using Emacsw32 installer wizard and the other was installed using Cygwin setup.exe (XEmacs).. can it also lead to this "spawning error?"
Initially I managed to get Auctex ran on Emacsw32 (stand alone), with Auctex compiled from source, since I was having problem with Xemacs (which needs xemacs-sumo to be installed as well, since if not mistaken it got stucked during japanese.el compilation).
Later, when I managed to get Xemacs on Cygwin ran, and compilation of Auctex succesfully done, I got my Xemacs running beautifully with Auctex, but my Emacsw32 prompted out this error.. although I previously got it work .. (I am not sure why.. since Emacsw32 's $HOME/.emacs is in site-lisp and XEmacs, is already in $HOME/.emacs , literally.
I know at the end of I've to choose to get one running, since both are similar.. and having both concurrently is just using the precious hard disk space.