OK I changed the files as suggested (Thx Jedi) and I verified that the directory to the roms folder is correct and that the roms in that folder are all zip files. This time when I generate list the message window pops up and says scanning rom folder (or something like that) and then closes with no change. Here is the log that is generated:
5/15/2007 7:12:17 PM MAMEWAH v1.62 launched
5/15/2007 7:12:17 PM Cursor scheme: Windows Default, Arrow: C:\WINDOWS\Cursors\arrow_l.cur, Wait: (None), AppStarting: (None)
5/15/2007 7:12:17 PM Desktop colour: 0
5/15/2007 7:12:17 PM Wallpaper filename: C:\Documents and Settings\Michelle\Local Settings\Application Data\Microsoft\Wallpaper1.bmp
5/15/2007 7:12:17 PM Desktop display mode: 1024x768 @ 60Hz, 32bit colour
5/15/2007 7:12:17 PM Decimal symbol: '.'
5/15/2007 7:12:17 PM Games list read: Old Mame-0.lst
5/15/2007 7:12:17 PM Layout selected: C:\Arcade\MAMEWAH V162\config\Old Mame\\layout.lay
5/15/2007 7:12:18 PM No. joystick devices attached: 0
5/15/2007 7:12:18 PM Ctrlr file selected: C:\Arcade\MAMEWAH V162\config\mamewah.cfg
5/15/2007 7:12:18 PM Keyboard enabled
5/15/2007 7:12:21 PM Layout selected: C:\Arcade\MAMEWAH V162\config\NES\\layout.lay
5/15/2007 7:12:21 PM Games list read: NES-0.lst
5/15/2007 7:12:24 PM List generation started...
5/15/2007 7:12:24 PM List generation aborted
5/15/2007 7:12:24 PM Games list read: NES-0.lst
5/15/2007 7:12:49 PM MAMEWAH quit
So now I think It got better...... I think

Any more insight?