sh can't run any programs from script when PATH exceeds 2500 characters

Wed Feb 24 11:44:00 GMT 1999

I have a sh script that basically sets up a bunch of environment variables, constructs a PATH based on some input files and then runs a program. If the path is over 2500 characters, the program (no matter what program it is) gives the following error:
foo: error 11
Even Win32 native apps such as cmd fail this way. Unfortunately, I can't easily reproduce the problem. I've tried writing a simple bare script to test it, but it won't fail. It only fails in my rather involved script that makes use of several input files from various locations.
Is there a hard limit on the PATH size? Is there perhaps a fixed buffer size used for the PATH conversion in the cygwin DLL? Any help or suggestions are appreciated....