I also had this make error if I included a source outside the directory of the project or if there were more than a few source files.
for a few days I ran make -f makefile.win from msys shell using devcpp to generate the makefile.
another trick to see the command to make is
in the additional makefile (which should be a global option rather than a per project option by default)

all-before:
    @echo before $(CC) $(OBJ) -o $(BIN) $(LIBS) $(CFLAGS)

I have mingw installed first and msys instaled after and make -v was calling the make included at msys/1.0/bin/make
then the executable only of devcpp. devcpp was aparently calling the same make.
I downloaded the newest devcpp from cvs (any reason why this is served up uncompressed?)
version 1.90 4.5.9.2
I added the c:\c\mingw\bin to the binary directory in the compiler option   (installed path to bin)
and changed
make
in the programs tab of compiler option to
mingw32-make.exe
projects that previously refused to compile now are fine.
remaining problems for me:
selection of a single char requires too precice positioning of the mouse pointer before the right click
which menu covers up the selection and you often cant see if you moved too far or not enough to keep the pointer in the selection.
not sure if this is something that can be fixed, maybe turning off reselection once a selection is made and a right click is had.
I dont have enough experiance with gdb debuging to know exactly what happed, but a few console windows
were left open and I had to do a hard reset, many winoldap's were left in the task manager even after exit devcpp.

great work by the mingw and devcpp dev groups!
an impressive combination of tools. thanks thanks again.