I have tried specifying "Intel core 2" as well as using "Autodetect", also tried "dual core" compile options, tried no compile options, have tried "Clean compile" and "Disable warnings with errors" with the same results.
I have also tried installing a fresh install on a core2duo laptop that has never had MINGW or anything mame related installed on it, with the same result - for me, compiling dies around the "Archiving" phase with an error on png2bdc.exe "png2bdc.exe has encountered a problem and needs to close. We are sorry for the inconvenience". The last message was "Archiving obj/windows/mame/libcpu.a...", and the last compiling message (before the archiving messages) was "Compiling src/emu/cpu/tms57002/57002dsm.c..." (the stop point seems fairly consistent).
The png2bdc.exe file lives under "C:\MinGW\sources\mame0137\obj\windows\mame\build" - It's not part of the source file package, so I think that means it is created during compiling? I have also unzipped the updated png2bdc.exe and mamecompiler64.exe (after copying to specified locations) - If I double click the updated png2bdc.exe it tells me it is not a valid win32 file (is this update only meant for 64bit OSs?) - same png2bdc.exe error unfortuantely. If I hit "GO" again immediately (so clean compile is NOT selected", png2bdc.exe crashes almost immediately.
My compile options were "Using Parameters OSD=windows TARGETOS=win32 -j3 ARCHOPTS=-march=core2". I have attached the entire log from the mame compiler "Output" window to this message in case that will be helpful. This is a 32 bit machine I am compiling on.