Thank you guys for your responses.
Allen, I actually have never tried method in opening the file in question via UNC, but I do know for a fact that I can call a local file on the remote PC.
i.e: psexec -i \\remoteserver c:\windows\system32\notepad.exe c:\test.txt

In the above scenario, test.txt is actually created on the c:\ drive of the remote server. I wonder if back then (in older version), psexec had different behavior (??)

Richard,
Thanks for your pointer regarding wrapping %COMSPEC% in quotes.

Fortunately for me, since I'm working in VMWare, I was able to go back to a previous snapshot of the workstation, and get psexec to work. So, perhaps there were some changes that I had made in the latest release that broke the psexec functionality. Bottom line, I'm working again, but I really wish I could've known what the problem was, in order to avoid it in the future.

Oh well, in any case, I think I'm good. Thanks again for your time! I really appreciate it!
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Network Specialist
Chino Unified School District