I've never done driver development, but for 32 bit applications, while in config.sys I have the toolkit stuff in front of the OW stuff, I have a setenv.cmd that puts the OW stuff in front of the toolkit. It is easy to experiment using a setenv.cmd.
For building Doodles Screen Saver I ended up with,
setenv.cmd,
call owsetenv
call tkenv
call start-sdk
owsetenv.cmd,
@echo off
echo Open Watcom Build Environment
SET PATH=g:\WATCOM\BINP;g:\WATCOM\BINW;%PATH%
SET BEGINLIBPATH=g:\WATCOM\BINP\DLL;%BEGINLIBPATH%
SET INCLUDE=g:\WATCOM\H;g:\WATCOM\H\OS2;%INCLUDE%
SET WATCOM=g:\WATCOM
SET EDPATH=g:\WATCOM\EDDAT
SET WIPFC=g:\WATCOM\WIPFC
tkenv.cmd
ECHO OFF
set os2tk=G:\OS2TK45
set BEGINLIBPATH=%OS2TK%\DLL;%BEGINLIBPATH%
set PATH=%OS2TK%\BIN;%PATH%
SET DPATH=%OS2TK%\MSG;%DPATH%
SET HELP=%OS2TK%\HELP;%HELP%
SET BOOKSHELF=%OS2TK%\BOOK;%BOOKSHELF%
SET NLSPATH=%OS2TK%\MSG\%N;%NLSPATH%
SET IPFC=%OS2TK%\IPFC;%IPFC%
For the SNAP sdk, only needed for DSS,
start-sdk.cmd
@echo off
rem Batch file to create the initial setup for using the SciTech MGL
rem Graphics Library, using the selected default compiler.
rem Setup the default path environment variable
set OLDPATH=%PATH%
set DEFPATH=C:\OS2;C:\OS2\MDOS
PATH %DEFPATH%
rem Initialise the default compile time environment
call C:\SCITECH\bin-os2\set-vars.cmd
set DEFPATH=%SCITECH%\redist\release;%DEFPATH%
rem call C:\SCITECH\bin-os2\wc11-o32.cmd
call C:\SCITECH\bin-os2\ow10-o32.cmd
rem Change to the directory containing all the MGL sample code
cd %SCITECH%\EXAMPLES\SNAP\GRAPHICS
rem restore old path
set PATH=%PATH%;%OLDPATH%