Hello. I have seen this problem before in the context of AVR programming, and I believe it only affects Windows Vista, so you could consider upgrading.
It looks like make.exe is finding a shell (sh.exe) on your PATH, which probably came from WinAVR, and the shell is the thing that is crashing. One relatively easy thing to try would be to remove all folders from the PATH that contain sh.exe.
A better fix is available here:
https://www.madwizard.org/electronics/articles/winavrvista
You should be able to replace your msys-1.0.dll with the version from that site and hopefully that will make things work. Please let me know if you continue to have trouble.
–David