Windows 7 - editing path on VirtualXP?

I'm very new to virtual machines. I'm running Windows7 Enterprise, and I needed to install a virtual XP machine to run a very old compiler. I need to add an entry to the path so that I can access a folder structure in the command prompt. All of the default paths begin with %SystemRoot%, which I've found is the virtual C:\WINDOWS directory. So:

1) Is there a way to add a path to just the virtual C:\ directory (not C:\WINDOWS)?
2) When I add additional paths to C:\WINDOWS using the %SystemRoot% syntax, they don't seem to be acknowledged in command prompt. What am I doing wrong?

Thanks.

%systemroot% is an environment variable representing c:\windows

The following link shows how you can edit the path in XP.

How to set the path in Windows 2000 / Windows XP.

When you edit it, you just need to add ;C:\ to the existing path string so it becomes something like:

C:\Program Files;C:\Windows;C:\Windows\System32;C:\