Changes that you make to environment variables do not affect services that run under the Local System account until you restart Windows 2000 (821761)

CAUSE

This behavior occurs because services that run under the Local System account inherit their environment from the Services.exe process. The Services.exe process receives the environment settings for the Local System account when Windows 2000 starts. Because the Services.exe process does not use Windows Messaging, when it receives messages that indicate that a value has changed after Windows 2000 starts, the Services.exe process does not update its environment settings. You cannot force a service that is running to acknowledge a dynamic change to the environment of the Local System account.