You must be getting something wrong, or have environmental problems with your machine. Adding a user PATH
environment variable does result in it being merged into the environment of a new process.
Update: Perhaps this comment from the MSDN topic on environment variables might be pertinent:
Found out that on Windows Server 2003, once the system PATH passes 1920 characters, the user PATH environment variable is no longer merged with it to set the process PATH environment variable, even though the full system PATH (even if larger) will be included in the process PATH variable.