Still getting the same error.

Instant Clone agent initialization state error (19): Failed to execute postsync script (waited 5 seconds)

Here is the exact setting I am using.

c:\Windows\System32\cmd.exe c:\postsync.cmd

Tried moving the postsync.cmd script to another folder, C:\Scripts - same error
Tried using a new empty script test.cmd under both C: and C:\Scripts - same error

As an aside, the UI will not allow a double or single quote in the post-synchronization name field (or other fields).

Current SR# for reference is 20119373304