This is a big question. Drexler and Smalley argued over the practicalities of building a molecular assembler based on the principles of
mechanosynthesis. The idea behind this is that if you can build http://nanoengineer-1.com/content/index.php?option=com_content&task=view&id=39&Itemid=49 to hold individual atoms you could possibly manipulate the molecules to break or make chemical bonds. With a well (and I mean bloody well) designed system it may be able to co-ordinate huge (so huge you need standard form to measure it) numbers of these actions at once in such a way as to break things down at an atomic level and rebuild them.
Now it could be argued that molecular assemblers do already exist. Life is a good example of something that breaks down macroscale objects into their microscopic components and rebuild those microscopic components back into desirable macroscale objects.
The issues with molecular assemblers that appear as desktop atomic factories are as follows;
1) Designing the thing -
Such a system would be hugely complex, it's analogous to trying to design a human being from scratch
2) Limitations of certain structures -
Complex chemicals are only stable depending on very specific environmental conditions (temperature, pressure, pH etc). Trying to make these structures could be like trying to build a car with play doh that keeps changing it's composition, material characteristics etc.
3) Dealing with wear and tear -
If you have a small error it's possible that the system will break, if your atomic tool-tip moves wrongly (perhaps because of temperature fluctuations) and binds a piece of machinery to a chemical it's dealing with then how do you fix it? You have to design the system to reabsorb and rebuild itself and design it so that this repair system is more efficient than the rate of damage. Considering the complexity of molecular repair faculties in biological systems we are back to square one.
To sum up I don't think there is a legitimate argument that such a thing could not exist however the complexities involved are fantastic. You have to design a system far more complex than all the life that has evolved on Earth. Now very limited "molecular assemblers" do already exist in industry and more may come (e.g. http://bytesizebio.net/index.php/2010/02/17/codon-is-now-a-four-lettered-word/ ) but a universal constructor as envisioned by some science fiction writers (and some popular scientists) are going to remain fantasy for a long time. The science and technology needed to build them is astounding.