Just as an FYI, the Desktop path _does_ contain spaces if it is translated into an absolute path (it maps to C:\Documents and Settings\<you>\Desktop).
Is it possible that your MiKTeX installation (I assume you are using MiKTeX) became borked during an upgrade? If you open a command prompt and run 'kpsewhich article.cls', do you get a path to the article class file? Paul
