If your VS project contains any spaces in its path, the call out to mt.exe fails.

[williamAtXojo]

https://github.com/asklar/xaml-islands/blob/bf60a7f031b317be8c8ead794b6e92b45c057e68/build/Unpackaged.targets#L33

This should be updated to support spaces in the path by using quotes: <Exec Command="mt.exe -winmd:%22%(_UnpackagedWin32WinmdManifest.WinMDPath)%22 -dll:%22%(_UnpackagedWin32WinmdManifest.Implementation)%22 -out:%22%(_UnpackagedWin32WinmdManifest.Identity)%22 -nologo" />