Suppose you have your portableIcon installed on drive D: and your working directory is on drive E:
If you attempt to link files from the IPL, no matter how you set your IPATH, nticont will not find them.
I have not tested yet whether LPATH is similarly afflicted.
A workaround might be to create a symbolic link or "reparse point" on the same drive as your working directory, but that hack should be a last result when trying to address this issue.