I have reset the variables TEMP and TMP to D:\TEMP (and created that subfolder in the D:\ partition) but I am still getting the error with the last line:

WindowsError: [Error 3] The system cannot find the path specified: u'D:calibre_0.8.41_tmp_69_3rb\\xnrwyd_epub_output\ \*.*'

Note that it is still using 'D:'

I can read/write to the D:\ partition.