When Microsoft released Windows Server 2012, they disabled the creation of a "short name" in the NTFS file system by default. These were used back in the days when long names and spaces within names weren't allowed.
However, certain tools in ArcGIS (e.g. ACSCII to Raster) generate a GRID file which is an ArcInfo Workstation format. An ArcInfo Workspace cannot contain spaces in the path - this goes back to the days of Unix which it was orignally written for, but ESRI didn't rewrite the procedures when it was migrated to Windows.
The upshot of this is that tools that generate a GRID file as part of their process do not run by default on machines connecting to folders on Windows 2012 Server (if the path contains a space - which inevitably it does in the 21st Century).
It has never been a problem before because Windows Server 2008 and earlier did create the short name, therefore ArcGIS was happy.
Having logged a call, I have now been told that a bug won't be created and it is the user's responsibility to appreciate the limitations of certain tools. But this is as a result of Microsoft changing something and ESRI not keeping up - not user's fault in my view.
These tools that generate a GRID file need re-writing so they work on Windows Server 2012 by default (something which they are "not planning to do", apparently).
