See my recent post concerning a quick start for db2 for windows.  The key
part of that explains that the environment variables DSMI_CONFIG and
DSMI_DIR must be set in the ControlPanel/System Environment settings for the
SYSTEM variables.  Then the system must be rebooted or the db2 services
stopped and started so that the environment variables can be loaded into the
DB2 run-time engine.  The DB2 executables DSMAPIPW.EXE and DB2ADUTL.EXE can
use variables set the way you specify below.  That is because they read the
environment variables when you execute the commands.  When you do a DB2
backup however, those variables are not re-read because DB2 is already up
and running.

James Thompson