On 6/24 I committed a change to the text to be more clear. In nightly-builds or m3, the text says:
"The home directory does not exist or is missing a required file or folder: modules/org/jboss/as/server/main"
I do not have a windows computer right now so I'm really unsure of the affect of using a separate drive, though you indicate you even tried it on c:\jboss, so I'm not sure what the problem could be.