Problem solved…. or maybe just a workaround.
Since the complaint was about not having the proper image in the noted directory, I copied that image from the Resources file and pasted it into the output file * C:2d-1.0.1-x-0.9.1\Release.win32. Once I ran the .exe again, it now complained about a NEW missing image file. I then realized it needed to have all Resources copied/pasted into the Release.win32 directory. Once I did that with the HelloWorld & tests Resource files, everything now works.
Not to try and get Cocos2D to show up as a template option…
Worked! Here are the next steps I had to do to make Cocos2D show up in the Templates files.
1) Run install-templates-msvc.bat from the C:2d-1.0.1-x-0.9.1 directory.
2) go to directory C:2d-1.0.1-x-0.9.1\template\msvc and run InstallWizardForVC2010Express.js
After this, I went to Solution ~~> Add~~> New Project , and Cocos2d now shows up!