Setting up the VS2010 and other applications as listed at node-gyp wiki solved the problems.
On Windows XP/Vista/7, node-gyp requires Python 2.7 and Visual Studio 2010
According to the readme file in Microsoft Visual C++ 2010 Service Pack 1 Compiler Update for the Windows SDK 7.1, to ensure that your system has a supported configuration,
uninstall the following products first (if you want to save tons of time)
and then reinstall them in the order listed: (you can uninstall in any order :P)
Visual Studio 2010
Windows SDK 7.1
Visual Studio 2010 SP1
Visual C++ 2010 SP1 Compiler Update for the Windows SDK 7.1
On x64 environments, the last update in the list fixes errors about missing compilers and
error MSB4019: The imported project "C:\Microsoft.Cpp.Default.props" was not found
.