Works for me.
Is your source file on a read-only device?
Try running it from the command line and see what response you get.
If you're not familiar with the command line then save the code below as ape-lame.bat, in the same folder as your new LAME, and drag the APE file onto that rather than LAME.EXE.
CODE
LAME.EXE %1
PAUSE
Alternatively set up a new CLI preset in foobar and use that to do the conversion.