I ran into this problem today while migrating a VS2008 solution to VS2010. The problem occurred in either of the following scenarios:
In my projects, the Intermediate and Output directories were set to:
Under C/C++-->Output Files, I had the following:
Under Linker-->Manifest File, I had:
The cure was to remove the trailing \ from my C/C++-->Output Files section (because it's already part of those variables):
Normally, the double-up of using $(IntDir) or $(OutDir) with a trailing \ doesn't seem to cause trouble, even though it's bad practice. I can't remember now whether I did it by accident or if the conversion process did it, but for whatever reason, it seems to have been messing up MT.exe.
I hope this is useful to anyone else who encounters this problem. Your settings may well be different, but consider that it may be related to improperly formed filenames.