Ok, so I figured perhaps my initial attempts with cygwin were the issue, and perhaps that made it much worse than it should have been.  So I moved the directory and decompressed the archive again, started with ./configure, but as you said (which I didn't see in the docs) I added --enable-debug.  So far so good, go into make, which runs configure on pixman, and thats where I had the first error.  I'm not really sure what's supposed to be here, but here is the error with a little context...

checking whether to use MMX intrinsics... yes
checking whether to use SSE2 intrinsics... yes
checking whether to use VMX/Altivec intrinsics... no
checking whether to use ARM SIMD assembler... no
checking whether to use ARM NEON assembler... no
checking whether to use GNU-style inline assembler... yes
/c/projects/qemu-1.7.0/pixman/configure: line 12454: PKG_PROG_PKG_CONFIG: command not found
/c/projects/qemu-1.7.0/pixman/configure: line 12456: syntax error near unexpected token `gtk+-2.0,'
/c/projects/qemu-1.7.0/pixman/configure: line 12456: `   PKG_CHECK_EXISTS(gtk+-2.0, enable_gtk=yes, enable_gtk=no)'
make: *** [pixman/Makefile] Error 2

Here is the offending section

PKG_PROG_PKG_CONFIG
if test $enable_gtk = auto ; then
   PKG_CHECK_EXISTS(gtk+-2.0, enable_gtk=yes, enable_gtk=no)
fi
if test $enable_gtk = yes ; then
   PKG_CHECK_MODULES(GTK, gtk+-2.0)
fi

 if test "x$enable_gtk" = xyes; then
  HAVE_GTK_TRUE=
  HAVE_GTK_FALSE='#'
else
  HAVE_GTK_TRUE='#'
  HAVE_GTK_FALSE=
fi

Just in case its relevant, here is the output from autotools before running configure...
configure.ac:552: the top level
configure.ac:69: installing `./config.guess'
configure.ac:69: installing `./config.sub'
configure.ac:62: installing `./install-sh'
configure.ac:62: installing `./missing'
pixman/Makefile.am: installing `./depcomp'
autoreconf-2.68: Leaving directory `.'
(cd pixman; CFLAGS="-g  -fPIC -m32  " /c/projects/qemu-1.7.0/pixman/configure  --disable-gtk --disable-shared --enable-static)

I'm not an autotools guy, but I'm guessing PKG_PROG_PKG_CONFIG is supposed to have resolved to something else in autotools.  I've never had to develop something that needed to run on a wide range of platforms without QT (qmake) or cmake, so I never ventured into autotools....

Since I can see at least for the mingw version, disable-gtk is passed, so I just took the section out, and manually set it to no with the following replaced section.

#PKG_PROG_PKG_CONFIG
#if test $enable_gtk = auto ; then
#   PKG_CHECK_EXISTS(gtk+-2.0, enable_gtk=yes, enable_gtk=no)
#fi
#if test $enable_gtk = yes ; then
#   PKG_CHECK_MODULES(GTK, gtk+-2.0)
#fi
#
# if test "x$enable_gtk" = xyes; then
#  HAVE_GTK_TRUE=
#  HAVE_GTK_FALSE='#'
#else
  HAVE_GTK_TRUE='#'
  HAVE_GTK_FALSE=
#fi

I suppose this may also be a source of more errors, but I think this is pretty foolproof here.  It said --disable-gtk so, it should pretty much be a no brainer...

It seems like perhaps I was still thinking I could use cygwin up to this point, because I don['t have treat warnings as errors anymore.  I must have run into problems with cygwin after this point, and decided it might just be easier to use mingw since I remember seeing things to set target os in one of the configure scripts, cygwin wasn't an option, but mingw was, which made me decide to switch.  Sorry, I don't remember where that was....

Next error comes in linking qemu-img with the following block of errors...
  LINK  qemu-img.exe
block.o: In function `bdrv_set_dirty_tracking':
c:\projects\qemu-1.7.0/block.c:4367: undefined reference to `ffs'
block/qcow2-refcount.o: In function `qcow2_pre_write_overlap_check':
c:\projects\qemu-1.7.0/block/qcow2-refcount.c:1776: undefined reference to `ffs'
block/qcow2.o: In function `qcow2_create2':
c:\projects\qemu-1.7.0/block/qcow2.c:1452: undefined reference to `ffs'
block/qed.o: In function `bdrv_qed_open':
c:\projects\qemu-1.7.0/block/qed.c:430: undefined reference to `ffs'
c:\projects\qemu-1.7.0/block/qed.c:432: undefined reference to `ffs'
C:/MinGW/msys/1.0/lib/libiberty.a(getopt.o):getopt.c:(.text+0x691): undefined reference to `_impure_ptr'
C:/MinGW/msys/1.0/lib/libiberty.a(getopt.o):getopt.c:(.text+0x140a): undefined reference to `_impure_ptr'
C:/MinGW/msys/1.0/lib/libiberty.a(getopt.o):getopt.c:(.text+0x1520): undefined reference to `_impure_ptr'
C:/MinGW/msys/1.0/lib/libiberty.a(getopt.o):getopt.c:(.text+0x15fc): undefined reference to `_impure_ptr'
C:/MinGW/msys/1.0/lib/libiberty.a(getopt.o):getopt.c:(.text+0x1632): undefined reference to `_impure_ptr'
C:/MinGW/msys/1.0/lib/libiberty.a(getopt.o):getopt.c:(.text+0x166b): more undefined references to `_impure_ptr' follow
collect2.exe: error: ld returned 1 exit status
make: *** [qemu-img.exe] Error 1

This is different than what I had before.  I don't remember anything about ffs, so at this point, its not my cygwin attempt mucking things up.  Anyhow, I'll keep trying to plow through this, but it does not work smoothly on the latest MinGW/MSYS, as this was a brand new computer and a fresh pull of MinGW/MSYS.