Can you try replacing your EXE with http://www.northcode.com/misc/whoami.exe
and tell me what you see? Try it from the EXEC command and just double clicking on it. All it does is display where it was started from and what it was passed on the command line. If you don't see the same results in each case then Flash is doing something odd when it starts the application.
Another thing you can try is creating a BAT file that starts your EXE file and then using FSCommand to launch the BAT file (instead of your EXE).