Just thought I would let all know that the issue was the original Windows install.
The problem was with the mapped drives. After mapping a drive to the server, the icon in My Computer showed it as connected, when I clicked on it it would open, but the drive type in the details on the left of the screen read "Disconnected Network Drive". The issues I read about online with this were that some programs trying to access the drive found it inaccessible. Apparently this was the case with Pervasive and my mapped drive to the dbamfg folder.
A new install of Windows fixed it. Fortunately this was a new machine and there wasn't much to lose.
So if you ever see a type "Disconnected Network Drive" on a mapped drive, you have problems! I have never seen this before and I never found any solution from any tech support that I use here or on the internet. I tried just a repair of windows and that did not do anything.
Thanks to all who responded.