Oops that sounds like the compiler command name for assembler files has altered in some prev Arduino version and that Vm needs to be updated.

I guess you are using an Arduino 1.0.x version because for Arduino 1.5 the build process is read from the same definition files that the Arduino Ide uses.

I think you can tweak the vm config until the next release but first we need to know what the compiler command change. It would save some time if you could do the following if not then we will do this over the next few days.

In Arduino please switch on File>Preferences>Compile>Verbose and run a compile to see the .S commands

In Visual Micro switch Tools>Options>Visual Micro>Compiler>Verbose and run a build. Please post one .S compile from each build. 

Thanks very much

Hey,

I checked again but noticed that in Arduino (1.0.5) as well as in Visual Micro (latest) it doesn't compile. Just for clarity, the toolchain version I use is: 

avr-gcc (AVR_8_bit_GNU_Toolchain_3.4.2_992) 4.7.2
 

instead of the default 1.0.5 one:

avr-gcc (WinAVR 20081205) 4.3.2
 

The output is identical, except VM adds -DVISUALMICRO_COMPILER_VER=1

C:\Program Files (x86)\Arduino\hardware\tools\avr\bin\avr-gcc -c -g -assembler-with-cpp -mmcu=attiny84 -DF_CPU=8000000L -DARDUINO=105 -DUSB_VID=null -DUSB_PID=null -IC:\Program Files (x86)\Arduino\hardware\tiny\cores\tiny -ID:\***\libraries\RF12_Ignite -ID:\***\libraries\i2cmaster -ID:\***\libraries\i2cmaster\utility D:\***\libraries\i2cmaster\i2cmaster.S er.S.o
avr-gcc: error: unrecognized command line option '-assembler-with-cpp'
 

I think between gcc versions, the command line option has changed from 

-assembler-with-cpp
 

to

-x assembler-with-cpp
 

The bug with attiny i was referring to had something to do with the linker (ld.exe) so I copied just that from the new toolchain into the default one so it looks like the issue is resolved now.