Stuck moving files in the VCS and commit issue

I moved an image directory in PHPStorm 4.0.1 and it is stuck in the process of "Moving files in the VCS".  It has been doing this for about 120 minutes now.
I went up to the VCS and decided to attempt a commit.  The VCS shows the changes, that being the images being moved from one area to the other, however I get the following error when trying to commit:
Error executing "hg.exe".  Make sure you have setup the right executable in Mercurial configuration.
Original Error:
java.io.IOException:  Cannot run program "hg.exe" (in directory "C:\code\............."):  CreateProcess error=206,
The filename or extension is too long

**please note I left out my path above**

I've done commits using PHPStorm already without problems.
This is the second time I've had this issue and PHPStorm screwed up my repository so I had to recreate it.

Anyone else have this issue before?  Am I doing something wrong here?
Any help at all would be great.