I'm getting the same problem. Or very simular. Its copying the new built default.xip, mainmenue5.xip,settings3.xip, and the music2.xip in my C:WINNTxduTemp.
And its Batch file doesn't follow the destination I tell it where my xip files are.
So I have to copy and paste them over where I keep all of them.
So, it seems the batch.exe file is wrong, or a bug is in there or somewhere else or in the XdashUtils.
I just kinda made a soultion to this weird bug in XDashUtils. I found the Batch.dat file and px.ex and copy and pasted them back to where I keep all my XIPS for my editing of my new MS Dashboard. and then edited the Batch.dat file so it creats the updated Xips in two places. One where its supposed to be and the other still in the WINNT/xdutemp folder..