gcc not finding header file though its path has been included with -I

This was fixed by installing libcrypt-devel.

Then everything worked just fine... So problem solved!

This explains it better: Re: Difficult compiling Package::Stash::XS

Ok, I believe I've found the issue. I'm running this in Cygwin as mentioned, and it appears Cygwin was trying to use Windows strawberry Perl's gcc since it's own gcc wasn't installed! The Windows gcc probably had problems with a Cygwin style path, hence the weird error. I've now installed Cygwin's gcc and this problem is gone. It complained next about a <crypt.h>, that too was solved by installing libcrypt-devel from the Cygwin setup dialog.