Bug#1879: Emacs shell mode weirdness - looks like C code bug
Ian, I think the problem might be local to your system. I'm running a
pretty virgin system that was recently built from scratch and I can
run that command in emacs with no problem.
Was there anything enlightening in the *Messages* buffer?
The last 2 lines should just say:
Anything interesting, like permission problems or a lower level call
that you can try manually yo get closer to the problem?