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Where is the path to RTC client stored when you run objects from Development Environment?

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Since beginning of this week we started experiencing a problem on NAV2013R2 (build 37563) system whereby we can't run anything from the Development Environment - it immediately errors saying "Microsoft.Dynamics.Nav.Client has stopped working..." It worked until last weekend, and the only thing we see has changed is that .NET Framework security update was installed on Saturday. Event Viewer shows an error quoting faulting application path to Microsoft.Dynamics.Nav.Client.exe. The path is the full network path to the client folder, so our guess is this must be some permission issue. However the client is actually installed on the same server where we are running Development Environment, so the system doesn't have to follow the network path. So the question is: does anybody know if the path to NAV client is stored in an editable configuration file (or Table) anywhere? We just can't find it.
And yes, we tried the workaround of running Development Environment as administrator - oddly it worked a few times, and then it stopped, now giving us the same error!

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