I am really convinced the PhysX issue isn't TGC's Fault. If you download vs2008 express TODAY - all brand new - You'll have the same problem I'd venture to guess.
It USED to work for me - then I formatted my drive and was not game coding... then I wanted to game code - so I downloaded vs2008, set up everything ... and NO GO!
So... I'm (almost 100%) certain its cuz Microsoft changed the format of (or a version number) in the output *.lib files - so that it won't link with ones prior to this change I believe they made to *.LIB file formats.
I mean shoot - I wrote a Whole C++ wrapper for DarkGDK and DarkPhysics and sparky's... now JUST Physx won't work... demos wont work... Dark Basic? No problems.
Now that Update you just recommended... Look here to see why I won't touch it with your PC!
http://forum.thegamecreators.com/?m=forum_view&t=142674&b=15
Like your Avatar man
Cheers backAtCha