I recently got the xStep source and build packages.
(from ls-universe.com :

What is "xStep 0.24.7 Final"?
-> Well, it's basically a 100% source clone of Litestep 0.24.7-RC3!
-> The only real differences are:
It is compiled with the actual stable zlib and libpng Librarys
It is compiled with the actual stable STLPort Librarys
It is compiled with the actual Windows Core SDK
)

It's basically an updated version of RC3.

Anyway... the build that I downloaded works fine but when I try to build my own the litestep.exe and lsapi.dll files aren't identical to the already built files. When I run litestep.exe (the one that I built) it throws that nasty error "exception during module initialization." There are no errors returned from the build log and I have the newest version of STLport (4.6.2) , VC7.1, libpng, and zlib. I know that it can be compiled with 7.1 but I can't find much documentation on 7.1.

Any ideas anyone?

I believe you have to use an updated version of NLM with xStep (which is included in one of the xstep release zips).

You are correct but I already have that. I just forgot to mention it. Thanks for the idea though.

My build is fine :D Dont know whats wrong with yours.

Are you sure its your build?

that error: "exception during module initialization."

sounds like a module thing. Maybe load the modules 1 by 1 to identify which is the culprit ;)

You need to recompile libpng13 and zlib with the new compiler (VC7.1) and use the new libpng13.lib on the lsapi source folder.
If that doesn't work i have no other idea :|

P.S.: If you can/want to help to code the source join the dev team!!