Since it sounds like you need one spot to change the data location for everyone, IMNSHO you're right in going with an INI file in this case.

And storing it in an INI file with the application means we have not achieved 100% seperation.

The INI file should reside in a location accessible to the application, preferably the same directory as the APP or EXE, but it does not need to be built into the application.
So you really do have 100% separation, since in order to change the data location, all you have to is modify the INI file and not the application itself.