%WINDIR% not working

For the last two days something has got corrupted in my system (Windows 7 Pro 64 bit).
All of the shortcuts to Notepad, Paint, Explorer etc. in my Quick Start bar have lost their icons. When I click these icons I get the message:
[Window Title]
Windows
[Main Instruction]
Can't open this item
[Content]
It might have been moved, renamed, or deleted. Do you want to remove this item?
[Yes] [No]
I can still run these components by typing their name in the Search box in the Start menu, or by going to find them in the C:\Windows\System32 directory and double clicking them.
These shortcuts are set to %WINDIR%\System32\notepad.exe. The problem seems to be with the value of %WINDIR%. If I change the shortcut to C:\WINDOWS\SYSTEM32\notepad.exe then it works fine.
If I run SystemPropertiesAdvanced.exe, I can see the value of WINDIR is set to C:\Windows.
If in a command window I type "ping 192.168.0.7" (without the quotes), it says "'ping' is not recognized as an internal or external command, operable program or batch file." I imagine this is due to the same basic cause.
What is going on here? How can I diagnose and correct this?
I have tried doing a system restore back to a time when my PC was working properly. It made no difference to this problem.

Thanks - Rowan

Thanks for your suggestions.

I have already restored to a restore point before which I'm pretty sure the system was working correctly. It didn't fix the problem.

Also, loss of environment variables does not seem to explain the symptoms. If I run c:\windows\system32\SystemPropertiesAdvanced.exe (which I have to do explicitly, since the shortcuts to it use %WINDIR%), it tells me that WINDIR is set to C:\Windows, which is surely correct. Also PATH and other likely environment variables seem to be set to sensible things. But if in a CMD window I say set windir, it says "Environment variable windir not defined". If I say echo %WINDIR%, it says %WINDIR%.

So it's not apparently that the environment variable has lost its value (otherwise why is SystemPropertiesAdvanced showing it to me correctly? It's like it's lost its ability t0 retrieve the value (except for SystemPropertiesAdvanced).

Thanks - Rowan

I have discovered that, as someone suggested in a related thread, if I quit Explorer using Task Manager and then run Explorer again, all the problems temporarily disappear and things work properly. The other thread said that this was only a temporary solution, so I'm expecting the problems to reappear shortly. But this must provide a pointer to where the root problem is, mustn't it?

Rowan

I have this exact same problem and it's causing issues with other programs I have installed. Did you ever find a solution?

In case anyone comes across this thread I found a solution. Please read here All Geek, All the Time: Path Over 2048 Chars Kills Windir Environment Variable