Ok it seems to be a path length issue with 0.5.+ as my project still compiles with 0.4.+. I am now getting the following error with 0.5.+:
C:\Users\gfreyenberger\AndroidStudioProjects\HawkeyeFootballProject\HawkeyeFootball\build\exploded-bundles\HawkeyeFootballProjectLibrariesActionBarSherlockActionbarsherlockUnspecified.aar\res\drawable-hdpi\abs__textfield_search_right_selected_holo_light.9.png ERROR: Unable to open PNG file
:HawkeyeFootball:mergeDebugResources FAILED
FAILURE: Build failed with an exception.
* What went wrong:
Execution failed for task ':HawkeyeFootball:mergeDebugResources'.
> java.lang.RuntimeException: Running C:\Users\gfreyenberger\AppData\Local\Andro
id\android-studio\sdk\build-tools\android-4.2.2\aapt.exe failed. See output
I moved my project to D:\HawkeyeFootballProject and it builds just fine with that path. I will just work off of my D drive as a workaround.