It sounds like data generator is working perfectly. 2 suggestions.
1) Execute a batch file which will write out logging information to a write, execute data generator (redirecting output), write some data. End log file should tell you more about whats going on. for example:
echo 'Starting Generation' >> SDG.txt
"C:\\Program Files\\Red Gate\\SQL Data Generator 1\\SQLDataGenerator.exe" /project:"C:\\Northwind.sqlgen" >> SDG.txt
echo 'Finish Generation' >> SDG.txt
You can then see if it is being called, what Data Generator is outputting, finally if it doesnt ever finish. Of course, if SDG.txt is never created, the batch file isn't being called and thats your problem.
2) The problem might be around using a trail and executing the command line. The command line will wait until you press OK on the licensing screen. Under the covers, MSBuild might be executing it but it's sitting there waiting for someone to press OK for the license trail. Running the batch file should indicate if this is the problem.
Let me know how you get on and if you have any more problems.