The Gen Toolset and the Build Tool will run the VS2008 "%VS90COMNTOOLS%\vsvars32.bat" or the VS2010 "%VS100COMNTOOLS%\vsvars32.bat" to set up the Visual Studio Environment. The vsvars32.bat file executes VCVarsQueryRegistry.bat which contains the "reg" command to query the registry for VS directory locations. In certain situations, an error may occur like the following. "Cannot determine the location of the VS Common Tools folder."
Verify that the User ID used to start the Gen Toolset has the authority to run Microsoft's "reg" command.
Verify the PATH does not have a problem or typo where the reg command cannot be located in the C:\Windows\System32 directory.