Dan,
Why your model is failing (and I don't think it is to do with the %n%) is that the Make XY Event tool does not take asc files as input. For example sample1.asc won't work but sample1.txt will! I think it's a simple matter of changing the file extension. This is assuming your text files are comma separated and the first row is the header so something like:
ID,X,Y,Z
1,10,10,-9999
2,20,23,-9999
3,11,33,12.5
Duncan