mt-upgrade.cgi failing after initial logon

Version 4.21 - Windows Server 2003 R2

After running the initial logon/create new user, mt-upgrade.cgi fails with

"You have attempted to execute a CGI, ISAPI, or other executable program from a directory that does not allow programs to be executed."

Strange that I get that error because mt-check.cgi is successful which is in the same directory as mt-upgrade.cgi. Is the installation trying to access a directory that is outside /MT?

Perl as been added to both the site configuration and website extensions to allow .cgi files to run. I've also read and followed the Windows installation guide on this site. Please let me know what I am doing wrong or what permissions/settings I have missed.

mt-config.cgi info below:

• Movable Type version: 4.21-en
• Current working directory: e:/intranet/MT
• MT home directory: e:\intranet\MT\
• Operating system: MSWin32
• Perl version: 5.8.0
• Perl include path:
plugins\WXRImporter\lib
plugins\WidgetManager\lib
plugins\TypePadAntiSpam\lib
plugins\Textile\lib
plugins\StyleCatcher\lib
plugins\spamlookup\lib
plugins\MultiBlog\lib
E:\intranet\MT\extlib
E:\intranet\MT\extlib
E:\intranet\MT\lib
e:/Perl/lib
e:/Perl/site/lib

thanks much