General ⇒ ERROR: I can't write on file `../subdir/filename.aux

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Although this topic has been discussed before, I haven't found
a solution to this particular error message in my situation.

This is my folder structure:
+ wrapfile.tex
| + chapter1/chapter1.tex


I'm attempting to use \include to bring the child file chapter1.tex
into the wrap file but I'm getting an error:

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ERROR: I can't write on file `../chapter1/chapter1.aux'

In the wrapfile, I've tried unsuccessfully:

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\include{../chapter1/chapter1}
\include{/chapter1/chapter1}

I get the same kind of error with these relative paths and with
absolute paths like

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\include{c:/thesis/chapter1/chapter1}

I can get my document to compile when I use \input and specify an
absolute path. However, I would rather use \include instead of
\input.

Does anyone know of a solution for this error while keeping this
folder structure? I don't have any special write protection on the
chapter1 folder.

I'm using: MikTex 2.8, Windows 7, AucTex(emacs)