Open the file with a text > editor, and get proper cygwin path values there, and see if openjade > works.
That worked. I did a replace C:/ with /cygdrive/c/ using Wordpad, saved and ran make test and it was successful - no errors.
OK, updated configure.in to check for a windows jade setup, and file-entities.ent to only rewrite the cygwin values in that case. Please cvs update, autoconf(!), configure and then check again.
Goba