> It should be -u NONE (all capitals)

 -u NONE is the same result.

> It is mtxrun related. It works in linux, so it could be windows related. I
do not have a windows machine
> to test (and not enough diskspace to install windows on a VM).

mtxrun seems not execute the vim command line correctly.

> As a last resort, what does the log file say for this (all in one line)

>mtxrun --verbose --noquotes bin:vim "-u NONE -e -C -n -V10log -c \"set
tabstop=8\" -c \"syntax on\" -c \"set syntax=c\" -c \"let
contextstartline=1\" -c \"let contextstopline=0\" -c \"source
c:/context/tex/texmf-context/tex/context/third/vim/2context.vim\" -c \"wqa\"
\"vimdemo-vimsyntax.tmp\" "
The log file list as follows:
---------------------------------------------------------------------------------

"tabstop=8" [New File]
                      line 0: set
--- Options ---
  helplang=En         ttyfast             verbose=20
noloadplugins         updatecount=0       verbosefile=log
  iskeyword=@,48-57,_,192-255
                             line 0: syntax
No Syntax items defined for this buffer
                                       line 0: set
--- Options ---
  helplang=En         ttyfast             verbose=20
noloadplugins         updatecount=0       verbosefile=log
  iskeyword=@,48-57,_,192-255
                             line 0: let
b:changedtick         #3
v:version             #702
v:beval_winnr         #0
v:lnum                #0
v:scrollstart          command line line 0
v:dying               #0
v:lang                 C
v:count               #0
v:progname             vim.exe
v:cmdbang             #0
v:foldlevel           #0
v:ctype                C
v:prevcount           #0
v:mouse_win           #0
v:count1              #0
v:foldstart           #0
v:foldend             #0
v:profiling           #0
v:beval_col           #0
v:beval_lnum          #0
v:mouse_lnum          #0
v:beval_bufnr         #0
v:shell_error         #0
v:servername           VIM
v:lc_time              English_United States.1252
v:searchforward       #1
v:mouse_col           #0
v:statusmsg            line 0: let
                                  line 0: let
b:changedtick         #3
v:version             #702
v:beval_winnr         #0
v:lnum                #0
v:scrollstart          command line line 0
v:dying               #0
v:lang                 C
v:count               #0
v:progname             vim.exe
v:cmdbang             #0
v:foldlevel           #0
v:ctype                C
v:prevcount           #0
v:mouse_win           #0
v:count1              #0
v:foldstart           #0
v:foldend             #0
v:profiling           #0
v:beval_col           #0
v:beval_lnum          #0
v:mouse_lnum          #0
v:beval_bufnr         #0
v:shell_error         #0
v:servername           VIM
v:lc_time              English_United States.1252
v:searchforward       #1
v:mouse_col           #0
v:statusmsg            line 0: let
                                  line 0: source
Error detected while processing command line:
E471: Argument required
                       line 0: wqa

> If this does not work, does replacing bin:vim with bin:gvim work?

No.

Andy