My gut instinct says "windows registry". You can use "Start/Run/regedit.exe" (in the windows dir) to search the registry. Unfortunately, I just copied a working install of mysql form the d: drive on my laptop to this desktop, and started the server from D:\mysql\bin\winmysqladmin.exe, no install. My registry doesn't show any mysql.
That leads me to my other gut instinct, it could be a cache file in the "\TEMP" folder. Just delete everything in the \temp folder, and try again.
The only other thing I can think of is that when mysql is registered as a service, that registration holds the path to the my.ini file, and if it can't find the my.ini file where it expects it, then it'd use the defaults. You might even try puting the my.ini file you want, in the default my.ini location, or anywhere else you think mysql might look for my.ini.
I'm not much on NT, mostly win 9x and Linux(mostly Redhat).
Hope some of this help, if not now, then later.
William Janoch of ScriptingBiz.Com