Finally I got it working and got my bitcoin address as well. I really am an idiot..... the reason I couldn't get pywallet to work was because I had to write D: but I wrote D:\ by mistake.
Thank you to everyone who helped me out.

Any chance you could list the steps you took to actually set up pywallet, for a novice computer user to understand?. I am in the same situation you were in, with potentially 32 BTC at stake. I will understand if you don't have the time or inclination to help. Cheers.