You're missing a few special issues with Win here:
The limited user as itself is not the problem but the way the software is started as a limited user.
Runas != normal program start as user. If you login as that user and then start the program should work OK (can't test as I have no console access and don't want to add mercury user to various groups).
Also the switch /env changes the environment to be used to "to use current environment instead of user's." Thus the Admins Temp dir for writing temporary files (*this* behavior will have changed from 4.7.4 to 4.8: in 4.7.4 mercury.ini was written directly to, now it behaves as if a temp file is created and moved.)
Also your conclusion is wrong as the command that reproduces the error actually *is* issued from C:\Mercury ("cd C:\Mercury").
Sorry but that's how it is over here.