An empty sketch compiled OK. So I tried blink again and now it works. Go figure.
Note this line from the compile output
generating C/C++ file: C:\Users\Rob\AppData\Local\Temp\josharduinobuild1233808034218210217.tmp\test.cpp
it seems to be correct now.
Can you post the contents of the settings.txt in the sketch directory?
Don't know if you need it any more but there is no settings.txt.
Rob