TEMP% has different values for a Windows Service running as Local System

Paul Stovell discusses an issue encountered with Windows Services running under the SYSTEM account, where environment variables behave differently than expected. Typically, user-defined environment variables override machine scope values, but when services run as the SYSTEM account, the %TEMP% variable defaults to C:\Windows\TEMP instead of the user-specific path. This anomaly led to a bug in a pre-release version of Octopus Deploy, where environment variables were supposed to update automatically before each script run without restarting the Tentacle windows service. Stovell speculates that this behavior might be a backward compatibility feature for older Windows Services. He notes that services inherit environment variables from their parent processes, with wininit.exe setting TEMP to C:\Windows\TEMP, and mentions that a patch will be released to address the issue.