Yes I can reproduce the error from cmd. Command line argument is not even needed. Simply launching emacs from the cmd prompt gives the error when the directory path does not have an accented letter in it, and succeeds when it does. The default directory for cmd is C:\Users\Márton, that's why I couldn't reproduce the error from cmd initially.

PWD is not defined anywhere. (getenv "PWD") gives back nil in both cases.

Running

set HOME=D:\a

runemacs

makes Emacs create a new .emacs.d folder in D:\a, whereas

set HOME=D:\á

runemacs

makes Emacs create a folder named D:\� which it is then unable to populate, failing with a different error ("Cannot open load file: No such file or directory, ~/abbrev_defs")