Did you see what 'set' from a command prompt shows? I know some things like java, tcl, etc can end up having really long environmental variables for include, class, etc paths... 32k is big, so it should be obvious if that's the issue. Other than that we could try running cmd.exe directly and make it print the output of 'set' to a file and then see what the actual args getting to the child process are just in case it's an ioFTPD cookie issue.
There's also the args.exe script that pops up a window with the args to the program so you can see what the command line looked like. Unlikely, but not that hard to check.
Can you see if the paths you are having issues with have anything in common. In particular do they have symbolic links in the path, really long names, etc.
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