That'll be the ' then!
The error may be due to the path in which the project file is stored.
The folder which contains the .cydsn project file should have the same name as the project.
Can you try storing the project in the 'PSoC Creator' folder created automatically in 'My Documents'?
As you have mentioned the " ' " present in the path name could also be the cause of issue.
Let us know if this solves the issue.
The issue was indeed the " ' " character - saved the kit files in another location on the C: drive and everything works dandy now!