Now I know some or all of this you have probably checked out, but I've been taught not to assume anything. Have you checked the file path and made sure that the program (not a shortcut, but the actual program) is in the file path location you are setting? Are you using the correct slash (\) in the file path (it does happen, more often than most would like to admit)? Are you sure you are typing the correct extension?
If all of these issues check out, then I would propose that you simply do a change directory command and get to the directory you are wanting then using your original line.
I tested out my proposal below, and I was actually able to accomplish what you are wanting to do here. This was what I typed in to the command prompt, and the output I received.
c:\>set prog=c:\users\user\desktop\batch\Passing variables\arithmetic2.bat
c:\>for /f %A in ('"%prog%" 5 4') do echo %A
c:\>echo 9
9
I am also using a Windows 7 command prompt so my suggestion would be to either use the variable within the quotes as shown above, or to thoroughly check your other areas and make certain that all of the above issues are indeed addressed.
The other possibility is that this is the output from the program you are running. Try running the program with variables through the command prompt and see what output you get. At this point, it is difficult to troubleshoot the problem because it isn't apparant where the problem is.