That sounds like an interesting problem. I have never come acrossed it before.
Are you running a local version of Monarch or a network version?
Is the C: drive your local hard drive?
Can you post an example of a .bat file that you are trying to execute?
I use .bat files which execute project files and export to Excel all the time and have never had a problem with V7 or V8.
Expanding on Dan's comments, one other thing to check:
In your batch file do you refer to the monarch exe just by name, or do you supply a complete path name? I had problems when the DOS window assumed a different path then the XP os did & the batch file did not run.
Expressly naming the path fixed this problem for me.
Let us know if this helps.