It is machine specific, and it's probably due to how they are using it at GT.
That line is not causing me any problems, apparantly my system defaults to the setpath=. properly.
You could comment out that line (it would probably get rid of error messages in the logs) or you could hard-code it to your own system setting it equal to the location of the mysql.cgi (or actually the 2 .pm files).
What that is doing, probably, is allowing them to use the program as part of their general development, and have the script in several locations on their system. That would be a way to do it as I posted in an earlier message of putting the mysql.cgi in the Links admin directory. If you wanted to make the mysql.cgi script available, you'd do so, but set the the library to be at the level of the .../admin/Links library. That would keep the library files out of public access, and separate them into their own area.
Alex may have another view, but if you don't have a G:/mysqlman path on your system all that can do is generate an error message. It's otherwise harmless, and useless :)