Hi Pete,
I take it that drive K: is a different partition then RPM/YUM uses? If not it will fail.
Add set LIBPATHSTRICT=T to your X11env.cmd, probably after the BEGINLIBPATH statement.
You could try set LOCALE=en_US or set LOCALE=C
And for display, set DISPLAY=127.0.0.1:0:0 or set DISPLAY=:0.0 or set DISPLAY=127.0.0.1:1.0 or set DISPLAY=:1.0, not sure which is the best for your setup.