I believe the code from the Github repository https://github.com/LowPowerLab/WattMote WattMote.ino sketch has incorrect includes :-
#include <avr\sleep.h>
#include <avr\delay.h>
They should be :-
#include <avr/sleep.h>
#include <avr/delay.h>
At least I could only get it to compile using the later style of includes with forward slashes.
Hope this helps someone save some time.
Thanks, it actually compiles both ways on Windows 7, Arduino 1.0.5. So I changed those instances to "/".