Yes, that's curious.
Arduino (at least version 1.0.3 on my machine) uses WinAVR version 20081205. I just double-checked, and WinAVR puts avrdude.exe and avrdude.conf in the same <install>/bin subdirectory. So Arduino has done something different with the avrdude.conf from the base WinAVR installation.
I put the avrdude.conf file in the same directory as avrdude.exe in WinAVR so there would be no lookup issues. IIRC, avrdude looks first in the same directory for its configuration file before it looks elsewhere. Keeps things simple, IMO.
Eric Weddington
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