After running "use none" and then "use system" (or any other definition), a trailing ":" ends up in defined search paths. On most systems and under most shells this equates to adding "." to the end of the search path.
The trailing ":" should be removed.
usepackage 1.8
$ use none
$ echo $PATH
$ use system
$ echo $PATH
/usr/ccs/bin:/usr/bin:/bin: