Hi CofeeBreak,
Thank you for your comment, but I was able to find the problem (didn't solve it yet): In the FM command line interface, calling a HEX file located in a folder with brackets in its name, such as "C:\hello_World(V1)\LabVIEW.hex" will not be recognized by the FM.exe, whereas "C:\hello_World_V1\LabVIEW.hex" will work just fine. In the Flash Magic GUI and Command Line Manual section on hex files there is no mention of that, my solution at the moment is to remove the brackets from folder names.
Thanks
Amir