Just for comparison, for our Wildfire 5/Creo Elements Pro 5 install, I use the following without issues on Windows 7 (64-bit) and Windows XP (32-bit).
SET PTC_WF_ROOT=%APPDATA%\PTC\ProENGINEER\%WFROOT%\.wf\.
SET PTC_WF_CACHE=%USERPROFILE%\ptc\Windchill
Yes, no quotes, even though our user names have spaces in them, which means the path that comes from "%USERPROFILE% has spaces in it. (WFROOT is a variable I set myself ahead of time. I don't want conflicts between ProE versions so I rename the default folder per version.)
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