Actually I just removed the line I had in initflashfiles.txt to create the directory first thinking that it might be causing the problem. This is how I had it before, it does the same thing this way:
initflashfiles.txt:
Directory("\Windows\Start Menu\Programs")
irectory("Accessories")
Directory("\Windows\Start Menu\Programs\Accessories"):-File("WinRAR.lnk","\Windows\WinRAR.lnk")