Not only settings files, but they have to change the executables and VPK files constantly... pretty much all of EQ2 is of possibly dynamic files, so yeah... putting any of it in Program Files would cause problems.
Ever since Windows 5.x, there has been a set place for volatile application data, but not everyone used it until Vista came out. So despite looking "really weird", it's almost a decade old. Okay, so it changes from each Windows version, but it's always been easy to detect from environment variables.
The easiest way for end-users to find this location is to type %APPDATA% into an explorer location bar. Although thinking about it, they probably use one that works for all computer users instead of just the currently logged in one.
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