Description:
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Part of the new strategy of PHP is that you do not need to place files in the c:\windows or other "global" scattered directories. This does not yet work for extensions:

Changes to the PATH environment variable are not available for PHP. Only the original PATH (before having updated the PATH) appears to be visible to PHP. 

If you want to load an extension, say php_mysql.dll, and this extension needs something from the new path, say libmysql.dll, you are out of luck.

Reproduce code:
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1. Install Apache 2.0 or 2.2
2. Install PHP using default instructions
3. Add PHP path to the PATH (system wide)
4. Configure Apache to use PHP
5. Place php.ini in configs/apache
6. Test Apache with PHP --> success
7. Test PATH in command prompt --> success
8. Uncomment php_mysql.dll extension line
9. Copy php_mysql.dll to extension_dir
10. Restart Apache --> error occurs

Note: for these instructions to work, it is best to leave as much of the original settings in place.

Workaround: place the offended files (php_mysql.dll and libmysql.dll) in the root location of Apache.

Expected result:
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I expect that after installing PHP, it will look for the PATH locations and locations mentioned in php.ini. The extension location is not searched by default (for linked dlls), so that is not an option.

If you do not have the luxury to restart a server, you will have to place some needed dll files manually to these scattered locations.

Actual result:
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The result of steps 1-10: Apache cannot be restarted. PHP raised an error. In the Event Logs of Windows you will find:

Type: Information
Source: Application Popup
Category: None
Event ID: 26
Description:
Application popup: httpd.exe - Unable To Locate DLL : The dynamic link library LIBMYSQL.dll could not be found in the specified path C:\Program Files\Apache Software Foundation\Apache2.2\bin;.;
C:\WINNT\system32;C:\WINNT\system;C:\WINNT;C:\WINNT\system32;
C:\WINNT;C:\WINNT\System32\Wbem;D:\Program files\Sun\AppServer\jdk\bin.