Due to a problem in Quartus® Prime Software you may see the above error. Quartus does not support long paths when:
1) Any long path operations are attempted by directly calling the command line executables in Powershell. example : running quartus_*.exe on a project with long paths.
2) Any long path operations by Quartus GUI or by command line are attempted via the normal command shell - example: creating a project with long paths.
To work around this problem, create the folder in Powershell first before launching Quartus®.
This problem is scheduled to be fixed in a future version of the Quartus Prime Software.