There is no such limit.
Could you try to use ADT from AIR SDK to package the app?
Seems unlikely but does Flash send the included files to ADT on the command line? It could overflow the command line. It's pretty unlikely that only 40 paths would be that long but maybe together with other stuff that gets passed...
Update: Appears to be a Mac-only Flash CS4 bug.
Out of frustration I downloaded a trial version of Windows CS4 and published the same set of files. Windows version of Flash CS4/AIR 1.5 allowed me to include many, many files. No errors or crashes. Also - the Windows version of Flash CS4 remembers the files you've selected to be included. Mac doesn't. To verfiy my findings - I uninstalled CS4 on the Mac and reinstalled (with the correct updates) ... same results ... hard application crash.
For the time being I'm going to pubish from Windows (for the next 30 days, at least). I will also look into ADT from the SDK on the Mac and see if that gets around the problem. I really like to remain working on a single platform. This is kind of stupid bug for a commerical product. Very disappointing.
Solution: Use ADT in the AIR SDK. Bug/Error appears in Mac version of Flash CS 4 (10.2). If you use the command line tool - no publishing errors.
For anyone familar with the command line ADT - is there a configuration file of some kind for preserving complex include files? Right now I'm copying and pasting included file & folder names from a text document - seems kind of unwieldy.
thanks - DF
You can use wild cars "*".
If you put everything in one dir, you can use "*" or "." to include everything in that dir.
Should save you lots of typing.