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Ever since I've updated to MiKTeX 2.8, xypic does not seem to work, to the point that, if I try build an output PDF with a latex file in which I use xymatrix, for example, I get a fatal error. I've been trying to fix this for several hours to no avail. I've gathered that this is a somewhat well-known bug having to do with the .enc files associated to xypic simply not being included in the installation. However, I've tried installing the newest version of xypic which includes these files, and I still get the error:

!pdfTeX error:

pdflatex (file xyd.enc): cannot open encoding file for reading ==> Fatal error occurred, no output PDF file produced!

However, xyd.enc exists, I know this for sure. Perhaps I put it on the wrong directory- the installation instructions for xypic 3.8.2 are less than enlightening as there location is suggests for this file does not exist (however I made a directory there anway and put it there, and also put it i a few other places to make sure).

Has anyone else encountered this error and know a fix? I should mention that I am a mathematician not a computer scientist, hence not extremely computer-savvy (but certainly not illiterate.)

P.S. I get a similar error when trying to build output to a DVI or PS.