Where are you trying to make the file?
On a NTFS partition perhaps?
Or maybe on the ramdisk?

I did a quick test on this (Debian sid) machine and it worked OK:

Code:
wander:/tmp# dd if=/dev/zero of=./swapfile bs=1M count=100
100+0 records in
100+0 records out
104857600 bytes transferred in 0.437670 seconds (239581359 bytes/sec)
wander:/tmp# mkswap ./swapfile 
Setting up swapspace version 1, size = 104853 kB
no label, UUID=9dccb944-ed87-465f-bbbe-a37df2517ca8
wander:/tmp# swapon ./swapfile 
wander:/tmp# free -m
             total       used       free     shared    buffers     cached
Mem:          1011        966         45          0         72        705
-/+ buffers/cache:        188        823
Swap:          100          0        100
wander:/tmp#
Perhaps this is of any use?