@chris
I have just tested CMake here, and I found out, that I had forgotten to update CTest and CPack executables. It shouldn't make any difference however, and just to try I tested with the old executables (from the release), and it still worked perfectly here. Also I tried making QSimpleSheet with "CMake ..", and it works perfectly.
I also don't have to set any env variables differently (like PATH). So the problems you are experiencing is a very big mystery to me...
EDIT: Just for the hell of it, could you try and create a path like mine, eg.:
work:code/medium/cmake-2.8.5/bin/CMake
... and see if it accepts this?? Just create the drawers somewhere and assign work: to the base directory.