My .emacs contains
(setenv \"PATH\" (concat \".:/usr/texbin:/opt/local/bin\" (getenv \"PATH\"))) (setq exec-path (append exec-path \'(\".:/usr/texbin:/opt/lo
I hit a similar problem, but with a correct PATH, including trailing ´:´. It turned out the internal emacs shell program was missing, resulting in a ´Searching for program: No such file or directory´ message. Fixed with
(setq shell-file-name "bash").