Before Windows 7, max length of the PATH environment variable was 1024 chars. Many years ago, we found ourselves troubleshooting a huge problem in our environment that was caused by faulty install scripts that were appending the PATH variable many times taking the path length over the limit and causing all sorts of problems as PATH was cut at 1024.
Windows 7 increased the length but I've seen the same problem in other environments. I have seen a PowerShell question over at StackOverflow today, and apparently the person was running into the problem because the max path length was exceeded. When that happens, Windows just ignores the characters after the max length is reached.
I had written a PowerShell function that would search for and remove the duplicates that would increase the length of PATH unnecessarily. I put it up as a gist at github & sharing it here. Hopefully it helps someone.