The package is absolutely outdated in regard to the provided configuration file, as already noticed by Jon in a comment. As the error messsage shows, does the used command --find-latex-input not work and is not even mentioned in MiKTeX documentation anymore.
To get back the function one has to create an own file. Below I will provide one here. By the way: As it turned out, also TeX Live for Windows is affected.
First
Users of MiKTeX have to download a command line tool zip.exe, in TeX Live this is already included. So, as MiKTeX user go to ftp://ftp.info-zip.org/pub/infozip/win32/, download the latest zipXXX.zip and extract at least the contained zip.exe into a folder that is included in the system path. (A note on other archive programs in post scriptum.)
Second
Open your favorite text editor and paste the following in
# bundledoc configuration file for TeXing in Windows,
# by Steffen "Speravir" Hoffmann, licence LPPL,
# source: https://tex.stackexchange.com/a/159012/9237
#
# Derived from configuration files provided with program
# package by Scott Pakin
# ASSUMPTION: You have "zip" somewhere in your path, and it accepts the
# command-line options utilized by the "bundle" line below.
bundle: zip -r -v -9 %BDBASE%.zip %BDINPUTS%
sink: > NUL 2>&1
find: kpsewhich -progname=latex $BDINPUTS
Save it as wintex.cfg or whatever you want somewhere in your local TeXMF root (MiKTeX users: user maintained root, cf. Create a local texmf tree in MiKTeX). Pay attention, that you do not accidentally save with file extension .txt.
As experienced users will notice, this is actually built together from provided configuration files, but it works meanwhile in Windows.
Third
Make an update of your filename data base (FNDB). Then you can use the file with the --config option. MiKTeX users should know, though, that a Perl interpreter must be separately installed in Windows, cf. MiKTeX and Perl scripts (and one Python script).
PS: In theory you can use every archive program, that works on command line. You would have to adjust the line starting with bundle in the config file. But there is one caveat: The variables %BDBASE% and %BDINPUTS% expand to a string surrounded by double quotes (change the bundle line to bundle echo %BDBASE% %BDINPUTS% and execute bundledoc with this changed version and you will see). The archiver must be able to deal with this. In a test with 7z, the commandline version of 7-Zip, I was not successful, other programs I couldn't test.
miktex.cfgfile is still valid. It uses the option--find-latex-inputto the MikTeX commandinitexmf, but that command is not listed (was it ever?) as an option here: http://docs.miktex.org/manual/initexmf.html -- which certainly explains theunknown optioncomplaint. Perhaps you should post this oncomp.text.tex, where the package author is more likely to read this (or email him directly). Unfortuantely, I don't use MikTeX or windows, so I can't test this, but I can confirm thatbundledocis great. – jon Oct 24 '13 at 02:47manpage also says that this was only tested on Windows NT and MikTeX, which sounds like the testing happened some time ago. Perhapsinitexmfdid remove some other options..? – jon Oct 24 '13 at 02:48