In the log, at line 960 I can see the following: "An error occured while refreshing environment variables updated during the installation of ''. Some users logged on to the machine may not see these changes until they log off and then log back on."
Have you tried to log off and log on back, then check the environment variable?
Do you have any custom settings on the machine that could prevent this refresh operation started by the OS? Advanced Installer uses standard API from Microsoft for creating/editing environment variables, so it should work without any problems.
Also, as a side note, please do not duplicate a question on the forums if you have already sent us an e-mail with it. Both communication channels have the same priority to us, therefore posting the question in both places doesn't really help.