I now see that Rob's answer contained the solution. But the bit of info I was overlooking was that I wrongly thought that the Project Options were the only place that mattered, and had forgotten all about Environment Options - Library.
Since I couldn't find any DSK files (apart from ones included in out-of- the-way demo files/packages downloaded long ago) Martin's suggestion sent me hunting through the Windows Registry instead where a I found the offending path included in: HKEY_CURRENT_USER\Software\Borland\Delphi\7.0\Library I soon reconciled this setting as belonging to the Library path under the Environment Options - and problem solved. Thanks, Ian.
