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The solution to this issue is explained quite well in this article on Support Center.
Let us know here if you have any remaining questions.
As for bsw.ini, its local copy can be perfectly specified through HYPERLYNX_INI for each user. But what about other ini files? For example, when invoking Touchstone Viewer (File > Edit Touchstone Models), the TouchstoneViewer.ini file is modified. How can this INI file be specified as local for each user? Placing a copy of this file next to a local copy of bsw.ini doesn't work.