Too interesting, I tried myself the first step: I changed dir to C:\Program Files (x86)\arduino-0021\hardware\tools\avr\bin>
and called:
avrdude -C "C:\Program Files (x86)\arduino-0021\hardware\tools\avr\etc\avrdude.conf" -v -v -v -v -p atmega328p -c stk500 -U flash:r:"c:/arduino.bin":r -P\\.\COM5 -b57600
And yes!, a nice c:\arduino\bin appeared. 32 K in size. So the download works! yippy! Now try to upload the arduino.bin file again.
avrdude -C "C:\Program Files (x86)\arduino-0021\hardware\tools\avr\etc\avrdude.conf" -v -v -v -v -p atmega328p -c stk500 -U flash:r:"c:/arduino.bin":w -P\\.\COM5 -b57600
The application still worked - could see that with the serial monitor! However my IDE now gets a failure on avrdude when I try to upload a new sketch. Think I need to restart my PC

because restaring the IDE did not solve it. I'll be back

rebooting didn't help either.

=> will be a reinstall of the IDE.
Sofar no guarantee ...