Okay, well it certainly works and I am on the same OS (Windows 7 Ultimate x64 SP1). Here is a video screen capture to show usage...
So just keep slugging away and you'll get it to work. Your missing something somewhere but I don't know where. Can you drop a .RAW file into the GUI? Are the Output path and Tif Model tag check boxes checked? Look at the video and duplicate what you see and it should work as you can see it does.
1. Download raw2cdng 1.4.9.zip
http://dl.phreekz.de/raw2cdng/raw2cdng.1.4.9.zip2. Extract it into a folder called raw2CDNG. You will get 2 files in the zip, mlv_dump.exe and raw2cdng.1.4.9.exe.
3. Copy one MLV and one RAW file into the same directory as the installed files.
4. Double click on the raw2cdng.exe file, the GUI opens.
5. Drag your MLV file from the same folder as where the program is onto the open raw2cdng GUI (program window).
6. The mlv_dump.exe command box should open and start extracting the MLV and then when it is finished you will see the RAW file in the GUI. Then all you need to do is export it where you want to.
I can drag and drop files from the desktop, SD card, C drive, D drive, it all works.