In what order are locations searched to load referenced DLLs?

Assembly loading is a rather elaborate process which depends on lots of different factors like configuration files, publisher policies, appdomain settings, CLR hosts, partial or full assembly names, etc.

The simple version is that the GAC is first, then the private paths. %PATH% is never used.

It is best to use Assembly Binding Log Viewer (Fuslogvw.exe) to debug any assembly loading problems.

EDIT
http://msdn.microsoft.com/en-us/library/aa720133.aspx explains the process in more detail.

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