odd behavior on client installation

Platform: Oracle 10.2 client on XP-Pro

I had been running the 10.2 instant client for some time, then decided to go back to a full client and noticed things I'd never seen before. I've done this hundreds of times over the years, so thought I had my understanding down pat. Here was my course of action:

• Save tnsnames.ora and sql.net.ora
• uninstall Oracle client
• delete c:\oracle
• delete c:\program files\oracle
• delete HKLM\software\oracle
• reboot - at this point the machine should look like it's never seen oracle.
• run install, select run-time client
• Net Config wizard comes up, but selecting 'next' goes directly to 'complete';
• At this point there are two directories in c:\oracle .. o C:\oracle\instant_client_10_2_0 o C:\oracle\product\10.2.0\client_1
• C:\oracle\instant_client_10_2_0 has no subdirs, just a single sqlnet.ora with a single line SQLNET.AUTHENTICATION_SERVICES= (NTS)
• Registry shows oracle home at C:\oracle\product\10.2.0\client_1. No mention of the instant_client directory in the registry.
• Drop my saved tnsnames.ora into $ORACLE_HOME\network\admin and connections result in tns-12154
• Testing various combinations of locating sqlnet.ora, tnsnames.ora and setting TNS_ADMIN in the registry found it didn't matter whether tns_admin was set, and it didn't matter which of the two possible locations I had tnsnames.ora in, it would always and only look in the instant_client directory for sqlnet.ora. This was determined by varying the setting of DEFAULT_DOMAIN to match or mis-match tnsnames entries.

Next I ripped Oracle off the machine again ... de-installed, deleted c: \oracle, etc. Then installed and selected for admin client. This time the net config wizard at the end actually prompted me for info. Investigating the directories showed the same as before - with both an \instant_client and a normal \product directory. This time the instant_client directory had the tnsnames file created by the net config wizard, and again, the setting of tns_admin in the registry seems irrelevant. Setting up client tracing and looking at the resulting trace file shows this:

[03-OCT-2007 13:29:45:182] --- TRACE CONFIGURATION INFORMATION FOLLOWS

---
[03-OCT-2007 13:29:45:182] New trace stream is C:\oracle\product
\10.2.0\client_1\NETWORK\trace\clientsqlnet_520_1.trc
[03-OCT-2007 13:29:45:182] New trace level is 6
[03-OCT-2007 13:29:45:182] --- TRACE CONFIGURATION INFORMATION ENDS
---
[03-OCT-2007 13:29:45:182] --- PARAMETER SOURCE INFORMATION FOLLOWS
---
[03-OCT-2007 13:29:45:182] Attempted load of system pfile source C:
\Oracle\instantclient_10_2\sqlnet.ora
[03-OCT-2007 13:29:45:182] Parameter source loaded successfully

Notice that the very first place it looked for sqlnet.ora was in the
instant_client directory.  When did this become normal behavior, and
what mechanism is telling it to look there rather than in ORACLE_HOME/
network/admin?

As a next step, I deleted the entire instant_client directory and
dropped my sqlnet and tnsnames files into ORACLE_HOME\network\admin
and removed tns_admin from the registry.  Everything connected first
time,and the trace file showed that the first place it looked for
sqlnet.ora was in ORACLE_HOME\network\admin.

So ...
1)	why is this instant_client directory being created?  I've never
seen it before without explicitly installing instant client.
2)	Why does the net configuration wizard fail when installing the run-
time client?
3)	Where is the beginning of the chain of events that tells sqlnet
where to begin looking for the config files sqlnet.ora and
tnsnames.ora?  I always believed it was ORACLE_HOME/network/admin
unless over-ridden by tns_admin in the registry or environment, but
this does not appear to be the case here.

A reference back to the doc that explains would be fine.