This looks like bug 1110812 but in that report there was no mention of it happening on cygwin. So...creating new report to reflect the same/similar issue on cygwin.
Details:
winXP
cygwin and cygwin supplied libs (latest 2007-12-13)
python 2.5.1 (from cygwin)
rdiff-backup-1.1.14
Tried librsync with both (rebuilding/installing rsync-backup each time)
librsync-0.9.7
librsync from...
2007-12-13 19:36:31 UTC in librsync -- network-delta library