I’ve been struggling with this one for while and when I recently installed Toad for MySQL I got the same issue.
I installed sysInternals process monitor tool to try and work out which file was causing the issue.
The answer is temp files.
Both SQL server management studio and toad use a similar naming convention for their temp files. Both use the temp directory under your user account in Documents and Settings. In my case, there were over 60 thousand *.tmp files in that directory.
Watching the query execute through process monitor I could see the SQL IDE continually trying and failing to identify a temp file name which didn’t exist until it finally gives up with a “The file exists” error.
The solution is simply to clear out the *.tmp files in your local settings temp directory.
Both SQL Management Studio and Toad for MySQL are now working fine on my machine.
Hope this helps.