Interestingly, the problem only shows up when starting Python from the installation directory. Looking at the imports using python -vv shows that in this situation, Python tries to import modules, packages, extensions etc. using *relative* paths.
I'm not quite with you here. Are you saying both Win98 and 95 use relative paths, but only Win95 has the problem, or that only Win95 sees relative paths?
My Win98 box uses absolute paths for all imports when using -vv
Would it be hard to tweak Python into always using absolute search paths during module import ?
Where are the relative paths coming from? If we can determine that, we can determine how hard it would be to fix ;-)