If it is asking specifically for eq2.exe, there is something wrong. With the new LaunchPad, you can not and must not use eq2.exe to launch the game. In fact, a fresh installation will not have eq2.exe in it. You can point to launchpad.exe if you want to go through the updater, or you can point to evequest2.exe to launch the client directly.
As for putting Win7/Vista installations in Users\Public, that was a desperate move by SOE to solve endless file permissions problems caused by Windows meddling with applications installed in 'protected' areas.
For my WIn7 setup, I created C:\Games and C:\Utils to be safe install points for the applications that Win7 is most likely to screw up. This has saved me a lot of hassle.
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