Environment variables define the system and user environment information, and they contain information such as a drive, path, or filename. Environment variables provide information that Windows XP Professional uses to control various applications. For example, the TEMP environment variable specifies where an application places its temporary files.

System Environment Variables: System environment variables apply to the entire system. Consequently, these variables affect all system users. During installation, Setup configures the default system environment variables, including the path to the Windows XP Professional files. Only an administrator can add, modify, or remove a system environment variable.

User Environment Variables: The user environment variables differ for each user of a particular computer. The user environment variables include any user-defined settings (such as a desktop pattern) and any variables defined by applications (such as the path to the location of the application files). Users can add, modify, or remove their user environment variables in the System Properties dialog box.

Windows XP Professional sets environment variables in the following order: By default, Windows XP Professional searches the AUTOEXEC.BAT file, if it exists, and sets any environment variables.

Next the system environment variables are set. If any system environment variables conflict with environment variables set from the search of the AUTOEXEC.BAT file, the system environment variables override them.

Finally, the user environment variables are set. If any user environment variables conflict with environment variables set from the search of the AUTOEXEC.BAT file or from the system environment variables, the user environment variables override them.

For example, if you add the line SET TMP=C: \TMP in AUTOEXEC.BAT, and a TMP=X: \TEMP user variable is set, the user environment variable setting (X:\TEMP) overrides the prior setting C:\TMP.

Preventing Windows from searching the AUTOEXEC.BAT file is by editing the registry. For this, go to "Start->Run" and enter "regedit" and search the key listed below. You can create one string value "ParseAutoexec", if this value does not exist. Now you can set this value to disable reading the environment variables from "Autoexec.bat".

Click “OK” and close the registry editor.
Restart the system or logoff to see the changes taking effect.