Nope I wasn't able to find a solution without raising permissions. I ended up making the proxy account used to run cmdshell to be a server sysadmin. But...
Strange though, this setup has been working for like 2 yrs at least, the only change I can indentify is that we did a upgrade to windows server 2003 SP2...
It works from my account, my account is sysadmin. But the stored proc is run through SQL Agent job and is owned by a user with no sysadmin........... would...