What message do you get when you run setup_xampp.bat?
I'm not sure how you have things set up - BUT - setup_xampp.bat is always run from the root of the XAMPP installation. It makes 'fixes' to all the configuration files based on its current working directory (like pwd would in the *nix world).
Generally, you copy XAMPP to a new location and then run setup_xampp.bat
I see in your profile it says 'Windows/Linux", so if I say something you may already know, please forgive me. The USB version is not cross-platform.