I solved the problem through help on the Apple discussions. I will post the solution here for reference in case others have the same issue. Perhaps I can put it on a wiki?
1) In finder, choose Go->go to folder... /etc 2) Edit "launchd.conf" This file may not exist. In that case create it. Make sure it's called "launchd.conf" and not "lauchd.conf.txt" 3) add "setenv BIBINPUTS path(s)". Separate multiple paths with : Notice that the string after BIBINPUTS cannot contain spaces. 4) Restart computer.
