SUM - Stuck at phase MAIN_SWITCH/SUBMOD_SWITCH_KERNEL/ENVFILES

I'm updating ERP 6 EHP 7 to SPS 7. In the phase MAIN_SWITCH/SUBMOD_SWITCH_KERNEL/ENVFILES, I'm getting the following error:

Severe error(s) occurred in phase MAIN_SWITCH/SUBMOD_SWITCH_KERNEL/ENVFILES!

Last error code set: 'PATH' not found in user

Here's the content of PHASES.LOG:

1 ETQ201 Entering upgrade-phase "MAIN_SWITCH/SUBMOD_SWITCH_KERNEL/ENVFILES" ("20150324161718")

2 ETQ367 Connect variables are set for standard instance access

4 ETQ399 System-nr = '00', GwService = 'sapgw00' Client = '000'

1 ETQ206 Executing pre-phase DB specific actions.

1 ETQ200 Executing actual phase 'MAIN_SWITCH/SUBMOD_SWITCH_KERNEL/ENVFILES'.

1 ETQ399 Phase arguments:

2 ETQ399 Arg[0] = ''

4 ETQ399 Reading value:

4 ETQ399 HKEY_CURRENT_USER\Environment\PATH

4 ETQ399 failed:

4 ETQ399 ErrorMessage: The system cannot find the file specified.

1EETQ399 Last error code set is: 'PATH' not found in user environment

1EETQ204 Upgrade phase "ENVFILES" aborted with severe errors ("20150324161718")

Does anyone know what PATH it is looking for? Thanks.

Henry