Hmm, dowlnoad again the package, and recompile. This problem never happened before. Maybe an error occured during download.

In that case, you can't use TGA images. Hmm, the packager maybe did something wrong. Crystal Space supports TGA images without any problem. I don't no, who maked the package, but I try to help you:)

Libcrystalspace_d.lib is an output file, when you succesfully compile libcrystalspace project. This is impossibel now for you:

"c:\program files\cs\libs\csutil\archive.cpp : fatal error C1084: Cannot read source file: 'c:\program files\cs\libs\csutil\archive.cpp': Permission denied"

Is this file nonreadbale in your system? The problem is this "permission denied" file.

Hmm, do you have cstgaimage.dll in your Celtstart directory?

Your CRYSTAl env var must store the path to your CrystalSpace-src-1.2.1 directory in that case. There is no Crystal Space "executable", because CS is an SDK and not an application.

Do you have two CS build, one with VisualStudio somewhere and one in your Blender2Crystal\pycelstart7.8\cs directory?

Hmm, gcc versus VisualC++ dll-s. "C:\Blender2Crystal\pycelstart7.8\cs\" contains a vfs.dll, but this dll compiled with gcc.
Did you set up the CRYSTAL enivroment variable?

ILoader->LoadMapFile("world_name")  fuction loads the world file. When you in this world file puts this line:

<library>your_library_name</library>

then CS loads this library automatically with the world file. 

I don't understand the your problem.

The

<plugin name="genmesh">crystalspace.mesh.loader.genmesh</plugin>
means, CS will use the crystalspace.mesh.loader.genmesh plugin (standard) to load genmeshes. After this line, you can use genmeshes happily.

Crystal Space VFS plugin handles zip folders without any problem.

Can you show me a log file,after you you run walktest with -verbose comand line  option?

Do you use MSVC 9?

Can you compile walktest and the other apps and libs?

You need link the crystalsapce_.lib library file. Check the manual, how to do this.

Hmm, why do you use 1.3 win32 suupport libs? Use version 1.2_002 , maybe it helps.

Did yuo install and set up corrcetly the external win32 libraries?