Windows Error in Google App Engine
I got exactly the same problem with SDK 1.99 on Windows 8.
I was running a test script .yaml and .go file from Google Go's own working directory.
Moving my code to its own subdirectory solved the problem.
This is my first program in GAE. I'm working with latest GAE SDK, and Python 2.7 on Windows XP 32 bit. All was working fine; but to my surprise I'm getting the following error:

2013-03-20 22:48:26 Running command: "['C:\\Python27\\pythonw.exe', 'C:\\Program Files\\Google\\google_appengine\\dev_appserver.py', '--skip_sdk_update_check=yes', '--port=9080', '--admin_port=8001', u'B:\\AppEngg\\huddle-up']"
INFO     2013-03-20 22:48:27,236 devappserver2.py:401] Skipping SDK update check.
WARNING  2013-03-20 22:48:27,253 api_server.py:328] Could not initialize images API; you are likely missing the Python "PIL" module.
INFO     2013-03-20 22:48:27,283 api_server.py:152] Starting API server at: http://localhost:1127
INFO     2013-03-20 22:48:27,299 api_server.py:517] Applying all pending transactions and saving the datastore
INFO     2013-03-20 22:48:27,299 api_server.py:520] Saving search indexes
Traceback (most recent call last):
  File "C:\Program Files\Google\google_appengine\dev_appserver.py", line 194, in 
    _run_file(__file__, globals())
  File "C:\Program Files\Google\google_appengine\dev_appserver.py", line 190, in _run_file
    execfile(script_path, globals_)
  File "C:\Program Files\Google\google_appengine\google\appengine\tools\devappserver2\devappserver2.py", line 545, in 
    main()
  File "C:\Program Files\Google\google_appengine\google\appengine\tools\devappserver2\devappserver2.py", line 538, in main
    dev_server.start(options)
  File "C:\Program Files\Google\google_appengine\google\appengine\tools\devappserver2\devappserver2.py", line 513, in start
    self._dispatcher.start(apis.port, request_data)
  File "C:\Program Files\Google\google_appengine\google\appengine\tools\devappserver2\dispatcher.py", line 95, in start
    servr.start()
  File "C:\Program Files\Google\google_appengine\google\appengine\tools\devappserver2\server.py", line 827, in start
    self._watcher.start()
  File "C:\Program Files\Google\google_appengine\google\appengine\tools\devappserver2\win32_file_watcher.py", line 74, in start
    raise ctypes.WinError()
WindowsError: [Error 6] The handle is invalid.
2013-03-20 22:48:27 (Process exited with code 1)

I Googled it; but it seems that most of the people getting this error have something wrong in there PATH config or in x64 Windows.