When the installer for euphoria-40b2 or euphoria 4.0.4 is run, the user is given an option to install environment variables globally with a reboot or to set them locally per command prompt with a batch file.
However, this batch file is broken. The path is missing a percent sign, so WATCOM\binw is never added to the path.
Fixing this is as simple as adding the missing percent sign in the batch file code in euphoria-ow.iss
This technically affects 4.1.0 as well, as it has the same euphoria-ow.iss file. That in itself is an unrelated bug.
GitHub