The best way is to have a home texmf tree for every user. Create a home texmf tree for the user, e.g. c:\donald\texmf for user Donald. Under Windows NT, it is assumed that c:\donald is user Donald's home directory. Windows 9x users usually do not have home directories.
Copy the file c:\TeX\texmf\web2c\texmf.cnf into the web2c directory of the local texmf tree for the user, e.g. c:\donald\texmf\web2c.
Change this local copy of the file texmf.cnf to use the local texmf tree as explained in section 3.2. Uncomment the line setting the HOMETEXMF variable and set it to :
HOMETEXMF=c:/donald/texmf |
TEXMF={$HOMETEXMF,!!TEXMFLOCAL,!!TEXMFMAIN} |
Set the environment variable TEXMFCNF to the local texmf tree of the user, e.g.:
TEXMFCNF=c:\donald\texmf\web2c |