In Windows Vista/7/2008 Infrastructure:
You have a File server that hosts users personal files at \\Server\share\. For example the "Documents" folder for TestUser would be at \\Server\share\TestUser.
Using Environment manager to redirect "My Documents" to \\Server\share\%username%, the issue seen is that the user id folder (TestUser in the example above) is being renamed to "Documents" as viewed in the image below.
So instead of seeing a folder called "TestUser" in \\Server\share, you see a folder named "Documents" within \\Server\share.
From Windows Vista onwards, the My Documents Folder contains a Desktop.ini file which amongst other things amends the explorer view of this folder to its "Friendly" name (In this case Documents).
Environment Manager is correctly naming the folder, using the example above, to\\Server\share\TestUser.
This could be verified by listing the folder share via a cmd prompt, you would then view that the folders are all correctly named to the usernames.
This issue is by design from Microsoft, Environment Manager is correctly redirecting to the specific User Folder. Please refer to http://support.microsoft.com/kb/947222 which lists the Microsoft recommended workarounds.