OK, a solution hit me and it works (apparently), although it may seem odd.
Read more if you are curious...
I remembered something odd with how windoze handled the long paths in DOS boxes (older versions, as win2K DOS box works normally). When paths had spaces you could enclose it in quotes, when the path was too long it would chop it off at six characters and append ~1 as below:
E:\Program Files\Microsoft Visual Studio\VC98\bin becomes
I entered the path in this fashion in the CPAN config for make and make seems to make ;-)
<Ammendment>If you need to use this approach make sure you see reply by shenme for more information.
Use dir /x to get the real short name which "may not" have a ~1.
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