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There is a known issue if you try and use the run.cmd file. It should, however, have output an error message. We have fixed this for the next release.
It is quite normal to hold both library and generated catalog under Dropbox. In this case one generates the catalog as a sub-folder of that holding the library (default is the _catlog sub-folder). You should also be using the default generation mode. I am not sure why this is not working for you? You should also set the "Minimize Changes" option to minimize the number of files that will need syncing by Dropbox.
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