[AUCTeX] 11.82; local texmf tree path not picked up when compiling

[Shanks N]

Hello,
I recently installed cygwinized tetex 3.x series on my LAPTOP.  I have 
not made any changes to the texmf.cnf.  When I install packages in 
/usr/local/share/texmf/latex/, run texhash and then try to use it in 
auctex, it does NOT look in the local texmf tree.

The odd thing is, when I use C-c RET \usepackage and enter,say 
"cooltooltips" it picks it up from the local/share but when i hit
C-c C-c, it says  .sty file not found.

I'm now completely stumped because I don't remember doing anything 
specific for local packages other than running texhash after every install.

& the gnu/emacs-0605 directory is copied from the desktop machine.  From 
the auctex manual, I added the local/share to

TeX-macro-global's value is
("/usr/share/texmf/bibtex/bst/" "/usr/local/share/texmf/tex/" 
"/usr/share/texmf/tex/" )

Even that didn't work. So did a complete exit/launch of emacs a couple 
of times.

Any ideas would be welcome.  The worst case solution would be to install 
in the main tree, which I wouldn't want to unless forced to.

regards,
Shanks
--
p.s from the command prompt too, pdflatex did not work, exiting with the 
sty file not found


Emacs  : GNU Emacs 22.0.50.2 (i386-mingw-nt5.1.2600)
of 2005-04-17 on LAPTOP
Package: 11.82

current state:
==============
(setq
AUCTeX-date "2005-12-17"
window-system 'w32
LaTeX-version "2e"
TeX-style-path '("style" "auto" "c:/usr/local/share/texmf/style"
         "c:/usr/local/share/texmf/auto"
"c:/gnu/emacs-0605/site-lisp/auctex/style"
         "c:/gnu/emacs-0605/var/auctex")
TeX-auto-save t
TeX-parse-self t
TeX-master t
TeX-command-list '(("TeX" "%(PDF)%(tex) %S%(PDFout) \"%(mode)\\input %t\""
TeX-run-TeX nil
            (plain-tex-mode ams-tex-mode texinfo-mode) :help "Run plain
TeX")
           ("LaTeX" "%l \"%(mode)\\input{%t}\"" TeX-run-TeX nil
            (latex-mode doctex-mode) :help "Run LaTeX")
           ("Makeinfo" "makeinfo %t" TeX-run-compile nil (texinfo-mode)
:help
            "Run Makeinfo with Info output")
           ("Makeinfo HTML" "makeinfo --html %t" TeX-run-compile nil
(texinfo-mode)
            :help "Run Makeinfo with HTML output")
           ("AmSTeX" "%(PDF)amstex %S%(PDFout) \"%(mode)\\input %t\""
TeX-run-TeX nil
            (ams-tex-mode) :help "Run AMSTeX")
           ("ConTeXt" "texexec --once --texutil %(execopts)%t" TeX-run-TeX
nil
            (context-mode) :help "Run ConTeXt once")
           ("ConTeXt Full" "texexec %(execopts)%t" TeX-run-TeX nil
(context-mode)
            :help "Run ConTeXt until completion")
           ("ConTeXt Clean" "texutil --purgeall" TeX-run-interactive nil
            (context-mode) :help "Clean temporary ConTeXt files")
           ("BibTeX" "bibtex %s" TeX-run-BibTeX nil t :help "Run BibTeX")
           ("View" "%V" TeX-run-discard t t :help "Run Viewer")
           ("Print" "%p" TeX-run-command t t :help "Print the file")
           ("Queue" "%q" TeX-run-background nil t :help "View the printer
queue"
            :visible TeX-queue-command)
           ("File" "%(o?)dvips %d -o %f " TeX-run-command t t :help
            "Generate PostScript file")
           ("Index" "makeindex %s" TeX-run-command nil t :help "Create
index file")
           ("Check" "lacheck %s" TeX-run-compile nil (latex-mode) :help
            "Check LaTeX file for correctness")
           ("Spell" "<ignored>" TeX-run-ispell-on-document nil t :help
            "Spell-check the document")
           ("Other" "" TeX-run-command t t :help "Run an arbitrary
command"))
)

TeX-check-path's value is
("." "/usr/local/share/texmf/" "/usr/share/texmf/bibtex/bst/"
"/usr/local/share/texmf/" "/usr/share/texmf/tex/")

from texmf.cnf
TEXMFLOCAL = /usr/local/share/texmf