I suspect there's something conflicting in your path. Shuffling the order around only masks the problem instead of solving it.
Standard practice is to add custom paths at the end of $PATH, so as to not override system policy. It is a terrible security risk to put a user writable directory so early in your path. For example, someone could easily put a modified 'ls' in there that gains access to your account.
Technically, the proper fix for the readme would be to add a line stating that Cygwin is terrible and should never be used, but people get cranky when I start talking like that. So I don't.
I had a similar problem when I had a path with a whitespace in my windows path variable. Might be a solution to take out all paths with whitespaces. Oopo is right - Cygwin is a horrible thing to use, but it's still better than having no *nix environment on your windows machine.