My intention is to use the dropbox folder as a common area for configuration items. But the argument is treated as a relative path, not absolute, so the message on opening textpad is
C:\Program Files\TextPad 7\C:\Users\Lon\Dropbox\config\TextPad
The filename, directory name or volume label syntax is incorrect.
I would say it's a bug. The help for command line parameters states "If the folder pathname is not absolute, it will be relative to the folder containing TextPad.exe" which suggest an absolute path should be allowed.
What happens if you use %USERPROFILE%\Dropbox\config\Textpad\ ?