Whilst I don't have enough of a reputation to comment on the highest voted answer to this question, I would like to state that it is not exactly correct. I know this because no matter which workaround I tried in this post, nothing actually worked.
The kb article linked to in that answer actually states that:
However, note that modifications to the environment variables do not
result in immediate change. For example, if you start another Command
Prompt after making the changes, the environment variables will
reflect the previous (not the current) values. The changes do not take
effect until you log off and then log back on.
The part about the environment variables resetting to the previous values after reloading the command prompt is exactly what I experienced in Windows Server 2008.
The article goes on to say:
To effect these changes without having to log off, broadcast a WM_SETTINGCHANGE message to all windows in the system, so that any interested applications (such as Windows Explorer, Program Manager, Task Manager, Control Panel, and so forth) can perform an update.
That does not imply that Explorer broadcasts a WM_SETTINGCHANGE message once you have changed the system environment variables, or that it actually works. I'm not sure how you would do what is suggested in the KB article (to propagate the changes immediately) from the command prompt.