Probably the space between "Program" and "Files". Here's what I've been using successfully to get OrangeCD to use Winamp:

"c:\program files\winamp\winamp" "%1"

Notice the quotes around the command like as well as the parameter.

To implement the queuing function the command is similar:

"C:\Program Files\Winamp\winamp.exe" /ADD "%1"

The /ADD qualifier does not require quotes because it contains no spaces.

Microsoft caused a lot of problems for a lot of people by using "Program Files" instead of a simple "bin" directory like normal folks would use.