executing DEBUG STATIC application generates zlib error : zlib.dll

codebase 6.5 'c'
WIN32
S4STATIC
standard MDX build

error:
The application has failed to start because zlib.dll was not found. Re-
installing the application may fix this problem.

any idea how to compile my codebase application DEBUG build compiled
with S4STATIC to start without the zlib error. RELEASE version
compiles and runs fine. ? As far as i am aware, it should be linking
staticly to the zlib.lib library, not loading the zlib.dll at runtime.
Whilst error is displayed, the app still runs ok, although when you
close the error dialog, the app terminates with a second dll error.

thanks,