Updated comment for clarity and added integration test.

pkg/runtime/internal/envdef/environment.go

@@ -395,8 +395,10 @@ func (ed *EnvironmentDefinition) getEnvBasedOn(envLookup map[string]string) (map
 		if len(ev.Values) > 0 {
 			res[pev.Name] = pev.ValueString()
 			if pev.Name != osName {
-				// On Windows, delete the case-insensitive version. Our case-sensitive version has already
-				// processed the value of the case-insensitive version.
+				// On Windows, delete the redundant (case-insensitive) version that our case-sensitive
+				// version could conflict with. (Our version has already processed the value of the
+				// redundant version.)
+				// For example, delete "Path" while preserving our "PATH".
 				delete(res, osName)
 			}
 		}

test/integration/exec_int_test.go

@@ -178,6 +178,33 @@ func (suite *ExecIntegrationTestSuite) TestExeBatArguments() {
 	cp.ExpectExitCode(0)
 }
 
+func (suite *ExecIntegrationTestSuite) TestExec_PATH_and_Path_on_Windows() {
+	suite.OnlyRunForTags(tagsuite.Exec)
+
+	if runtime.GOOS != "windows" {
+		suite.T().Skip("This test is only for windows")
+	}
+
+	ts := e2e.New(suite.T(), false)
+	defer ts.Close()
+
+	cp := ts.Spawn("checkout", "ActiveState-CLI/small-python", ".")
+	cp.Expect("Checked out", e2e.RuntimeSourcingTimeoutOpt)
+	cp.ExpectExitCode(0)
+
+	cp = ts.Spawn("exec", "where", "python3")
+	cp.Expect(os.TempDir()) // from runtime's defined PATH
+	cp.ExpectExitCode(0)
+
+	cp = ts.Spawn("exec", "where", "notepad")
+	cp.Expect("notepad.exe") // from OS-defined default Path
+	cp.ExpectExitCode(0)
+
+	cp = ts.Spawn("exec", "does-not-exist")
+	cp.Expect("not found") // neither on PATH nor Path
+	cp.ExpectNotExitCode(0)
+}
+
 func TestExecIntegrationTestSuite(t *testing.T) {
 	suite.Run(t, new(ExecIntegrationTestSuite))
 }