This feature works by comparing timestamps on the files.
Maybe the files in your arduino directory have timestamps in the future? Perhaps if you extracted the zip file, then set your clock back? For example, take a look at the file:
C:\Program Files\arduino-1.0.1\hardware\arduino\cores\arduino\wiring.c
If it's timestamp is in the future, then it will still be considered newer than the .o file.
The easiest solution might be to extract a fresh copy of Arduino 1.0.1.