I've got a similar problem on my Windows XP computer. I can't upload sketches to my NG rev.c board. I know the board is connected through COM3: I use the Serial Monitor to send characters to the board, and the RX led on the board always blinks appropriately.
But when I try to compile the Blink program, I get back "Couldn't determine program size: " with no further information. When I try to upload to the Arduino, I get this:
C:\Program Files\arduino-0008\tools/avr/bin/uisp -v=4 -dpart=atmega168 -dprog=stk500 -dserial=/dev/com3 -dspeed=19200 --upload --verify if=C:\Documents and Settings<name>\Application Data\Arduino\Blink2\applet\Blink2.hex
All my paths seem to be correct: the preferences file is pointing at the correct folder to find the *.pde file. There's just no *.hex file on my harddrive.