Current versions of watchman+fsmonitor error out on Windows MSYS environment

I originally filed this as a [bug](https://bz.mercurial-scm.org/show_bug.cgi?id=5588) against fsmonitor in Mercurial's bug tracker, but the fact that things work OK with a much older watchman build (rev d1d427f3) makes me think it's worth filing here too.

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I maintain the MozillaBuild package that Mozilla distributes to provide a build toolchain on Windows.

Our basic setup is as follows:
* MSYS toolchain (the original, not msys2)
* Python for Windows (version 2.7.13)
* Mercurial installed via pip (version 4.2.1)

I've recently been trying to test the native fsmonitor with the latest watchman binary from upstream (rev 98b6d81 downloaded from the appveyor CI artifacts _- also confirmed since with rev 5e99349a_). With watchman added to my path, I've confirmed that I can properly invoke it from the command prompt:

$ watchman -v
4.9.0

However, when I set fsmonitor.mode = on, I get the following error whenever I perform any operations:
warning: Watchman unavailable: watchman command error: unable to resolve root c:\Users\Ryan\repos\mozilla-build: "c:\Users\Ryan\repos\mozilla-build" resolved to "C:/Users/Ryan/repos/mozilla-build" but we were unable to examine "c:\Users\Ryan\repos\mozilla-build" using strict case sensitive rules. Please check each component of the path and make sure that that path exactly matches the correct case of the files on your filesystem.

I've also checked and confirmed that the value of ui.slash has no bearing on whether this error hits or not. I'd previously been able to use hgwatchman (along with an older build of watchman) in this configuration, not entirely bug-free, but it worked anyway, so this appears to be a regression somewhere along the way.

If you'd like to download a test package the replicates the environment above, it is available from the link below:
https://bugzilla.mozilla.org/show_bug.cgi?id=1346656#c8