%SystemRoot% is not expanded when I use it in a command.

Start the Registry Editor (regedt32.exe)

Move to HKEY_LOCAL_MACHINESYSTEMCurrentControlSetControlSession ManagerEnvironment

Look at the Path in the right hand pane and check the type (its the second part), e.g.
Path: REG_EXPAND_SZ: %SystemRoot% etc.
If the type is not REG_EXPAND_SZ then perform the next steps, if not exit the Registry Editor

Double click on Path and select the contents and press Ctrl-C to copy to the clipboard

While Path is still selected, select Delete from the Edit menu (or click the Del key). Confirm the deletion

Make sure Environment is selected in the left hand pane and select "Add Value" from the Edit menu

Enter a name of Path (note the capital P in path), and type REG_EXPAND_SZ. Click OK

Double click Path and Ctrl-V to copy back in the info you copied into the clipboard. Click OK

Close the Registry Editor