Suppose your PATH environment variable looks like this:

C:\dir1;\\server\share;C:\dir2

Suppose that you call LoadLibrary("foo.dll") intending to load the library at C:\dir2\foo.dll. If the network server is down, the LoadLibrary call will fail. Why doesn't it just skip the bad directory in the PATH and continue searching?

Suppose the LoadLibrary function skipped the bad network directory and kept searching. Suppose that the code which called LoadLibrary("foo.dll") was really after the file \\server\share\foo.dll. By taking the server down, you have tricked the LoadLibrary function into loading c:\dir2\foo.dll instead. (And maybe that was your DLL planting attack: If you can convince the system to reject all the versions on the PATH by some means, you can then get Load­Library to look in the current directory, which is where you put your attack version of foo.dll.)

This can manifest itself in very strange ways if the two copies of foo.dll are not identical, because the program is now running with a version of foo.dll it was not designed to use. "My program works okay during the day, but it starts returning bad data when I try to run between midnight and 3am." Reason: The server is taken down for maintenance every night, so the program ends up running with the version in c:\dir2\foo.dll, which happens to be an incompatible version of the file.

When the LoadLibrary function is unable to contact \\server\share\foo.dll, it doesn't know whether it's in the "don't worry, I wasn't expecting the file to be there anyway" case or in the "I was hoping to get that version of the file, don't substitute any bogus ones" case. So it plays it safe and assumes it's in the "don't substitute any bogus ones" and fails the call. The program can then perform whatever recovery it deems appropriate when it cannot load its precious foo.dll file.

Now consider the case where there is also a c:\dir1\foo.dll file, but it's corrupted. If you do a LoadLibrary("foo.dll"), the call will fail with the error ERROR_BAD_EXE_FORMAT because it found the C:\dir1\foo.dll file, determined that it was corrupted, and gave up. It doesn't continue searching the path for a better version. The path-searching algorithm is not a backtracking algorithm. Once a file is found, the algorithm commits to trying to load that file (a "cut" in logic programming parlance), and if it fails, it doesn't backtrack and return to a previous state to try something else.

Discussion: Why does the LoadLibrary search algorithm continue if an invalid directory or drive letter is put on the PATH?

Vaguely related chatter: No backtracking, Part One