Windows – Quickest manual way to check what version of the Windows Installer is installed

Changes to environment variables should take effect immediately, if you make the change via the main Properties dialog for the computer in question (go to My Computer | Properties | Advanced | Environment Variables). After the changes are saved, Explorer broadcasts a WM_SETTINGCHANGE message to all windows to inform them of the change. Any programs spawned via Explorer after this should get the updated environment, although already-running programs will not, unless they handle the setting change message.

I'm not able to tell from your problem description what specific problem you're having with this. Can you tell us more about the specific scenario that isn't working?

This KB article may also be of use: How to propagate environment variables to the system

I'd add to the Process Explorer/Process Monitor suggestion - run FileMon and RegMon from Sysinternals too. You can filter/save a log of the msiexec and related processes, export to a csv and have a complete list of actions to the file system and registry. Compare/contrast with what has been written to the Windows Installer log, too.

You can also have a look at what Scott Willeke's Less Msiérables (LessMSI) can do for you ...

http://lessmsi.activescott.com/

Use it to extract and change guids and/or contents of MSI, repackage, check out all of the items in the MSI package, etc.