No that sounds about right. However Platform Builder can be fickle a lot of the time and not give a real explanation for why it doesn't want to build. My recommendation would be to build a new image from scratch.
Have you run through the "LoCE Windows CE BSP QuickStart Guide" yet? If not I would recommend doing so. This can be found at
http://www.logicpd.com/auth/downloads/LH7A404/ under the WindowsCE Documents category.
If this still doesn't work then I would remove all the drivers from the catalog in platform builder and delete the LoCE folder at c:\winCE500\platform. Once this is done reinstall all of the BSP components and drivers and retry.
Regards,