I would rather resort to PATH settings rather than going into macro substitution.

SET EXCLUSIVE OFF
SET PATH TO \data\, forms, prgs, projects, etc.
OPEN DATABASE my_data 
OPEN DATABASE my_data2
OPEN DATABASE my_data3

USE my_data3!table1 IN 0 ALIAS dbtable1
USE my_data!table2 IN 0 ALIAS dbtable2
USE my_data2!table3 IN 0 ALIAS dbtable3

DO FORM test_form

Also, using DE not necessary mean you have to mandatorily open databases. I only open database when I need to do something specific about it. But majority of our forms only opens tables especially that we uses PRIVATE datasessions.

>However, when I keep the "dbc" extension off the "CurDataSource" variable, I get an "Error instantiating cursor object" error when the form loads. Is there any reason for needing the "dbc" extension?

Not really. The above code runs flawless on every application we have.