http://bugs.winehq.org/show_bug.cgi?id=23934
--- Comment #2 from Andrew Nguyen arethusa26@gmail.com 2010-08-08 09:47:00 --- Created an attachment (id=30052) --> (http://bugs.winehq.org/attachment.cgi?id=30052) shell32: Avoid searching the parent process location when the directory is specified.
Does this patch help? It requires unit tests and is probably not completely correct, but it does resolve the launcher looping issue.