Couple of other things:

1) Is there an issue with c:\myapp\temp existing? I had a site using Win98 recently that would not create a temporary folder - I didn't get to the bottom of it, but it was the original release of Win98.

2) On Win2000, you could have a local policy that is preventing access?

3) Not sure about Notware, but does it support group policies?

4) Again on security, is there a SUBST or remap of local drives to networked resources for some classes of users - not common but possible.

HTH,
Simon