Run / Build / compile problems after clean Delphi 2007 install

[dankell]

I've just had my machine upgraded and am now having problems setting
up Delphi 2007 and getting it to obey the "Output directory" and "Unit
output directory" settings when compiling / building.

Quick background - all my projects are setup in a structure as below:

Project\ - executable goes at this level
Project\dcu\ - all dcus go here
Project\src\ - all other soure files, *.dfm, *.dpr, etc go here

so my "Outgoing Directory" under "Default Options\Directories/
Conditionals" is set to ".." and the "Unit output directory" is set to
"..\dcu". This all works fine on my old machine.

Fresh install of Delphi 2007 from the Update 3 full zip file on a new
machine and suddenly I have a problem. On a new project (i.e. only
files are in Project\src\) I get an error when I try and Run:

"Could not find program, 'Project\Example.exe'"

Sure enough, checking the outgoing directory there is no .exe.
However, there is a brand new .exe and .dcu file in the Project\src\
folder.

So Delphi is ignoring the setting when it *creates* the exe (build and
compile give blue-dots) but using them when it tries to Run.

I've reinstalled from the Original DVD, created new Projects and
imported the .pas files to try and force changes, clean installed my
machine, uninstalled *every* other application on it and still the
problem persists.

[in...@secure-iss.com]

Funny thing is I have just come across the same issue (same
circumstances with a new machine on Vista, no issues on old XP
machine).

I have removed the output folder thus far as a work around. But seems
like a minor issue to correct?

Anybody else know of a fix?