I changed my startup prg to do this:

lcStartDir = JUSTPATH(SYS(16,0))
SET DEFA TO (lcStartDir)

>>As it turns out the problem is that the desktop shortcut did not have the "Start In" value populated. How can this be done in the Inno Setup?
>
>You can specify the 'Start In' folder by including a 'WorkingDir' parameter in the Icons section entry for the shortcut. For example:
>

>Name: {userdesktop}\MyApp; Filename: {app}\MyApp.exe; Tasks: desktopicon; WorkingDir: {app}
>