Create one more new project with Project Designer.
Open up the AVR Studio file. Don't change anything.
Compile the code.
----------
If that still doesn't work, uninstall WinAVR completely. Remove all traces of it, all folders, all files. Then re-install again.
----------
If that still doesn't work, uninstall AVR Studio completely. Remove all traces of it, all folders, all files. Then re-install again.
I'm having you do this because I feel a path got corrupted somewhere.