Word was already run on this machine. The folder structure existed. That wasn't the problem.

The "Application Data" directory has the attribute Hidden.
I upgraded Kixtart and ran it with the same syntax. The copy worked....
With 3.6 it didn't work, it stopped RIGHT AT THE APPLICATION DATA DIRECTORY.
(I did tests)

And while yes, the user has rights to the folder, it seems that maybe version 3.6 can't run the copy command on a Hidden directory?

Anyhow, it worked, so I must assume that was the cause, and the fix.