When you call SmartSprites with a relative path on Windows it will crash, although the absolute path works fine.
e.g. C:\workspace\smartsprites>smartsprites.cmd ..\web\WebSite\Root
will produce:
and C:\workspace\smartsprites>smartsprites.cmd C:\workspace\web\WebSite\Root functions well.
The problem with the above invocation (actually with both, I'm not sure if the latter would work either) was that SmartSprites expected a file as an argument, but got a directory. To provide the directory with CSS files, use the --root-dir-path parameter. See http://csssprites.org/#global-options
for more information on these options.
I've added some extra checks to produce more meaningful messages in such cases. I also improved handling of relative --root-dir-path a bit.