virtualenv not working in Python 2.7.6.1

[chrischmo]

I've installed PortablePython on a 64bit Win7 machine but cannot use virtualenv (installed via pip).

Background: The machine has python2.7.5 pre-installed but I do not have permission to install anything on it via easy_install/pip. So I installed PortablePython into my user folder (shortened the name of the installation folder to PortablePython) and wrote a .bat file that starts cmd with the following folders added to PATH:

@set python_install_root=U:\Apps\PortablePython\App
@set PATH=%python_install_root%;%python_install_root%\Lib;%python_install_root%\DLLs;%python_install_root%\Scripts;%PATH%

The interpreter starts up fine and pip as well as virtualenv got installed without problems, but whenever I try to create a virtual environment, the following happens:

U:\Docs\Code\flask_book\flasky>virtualenv venv
New python executable in venv\Scripts\python.exe
Installing setuptools, pip...
  Complete output from command U:\Docs\Code\flask_b...v\Scripts\python.exe -c "import sys, pip; sys.
..d\"] + sys.argv[1:]))" setuptools pip:
  Ignoring indexes: https://pypi.python.org/simple/
Downloading/unpacking setuptools
Cleaning up...
Exception:
Traceback (most recent call last):
  File "U:\Apps\PortablePython\App\lib\site-packages\virtualenv_support\pip-1.5.6-py2.py3-none-any.w
hl\pip\basecommand.py", line 122, in main
    status = self.run(options, args)
  File "U:\Apps\PortablePython\App\lib\site-packages\virtualenv_support\pip-1.5.6-py2.py3-none-any.w
hl\pip\commands\install.py", line 278, in run
    requirement_set.prepare_files(finder, force_root_egg_info=self.bundle, bundle=self.bundle)
  File "U:\Apps\PortablePython\App\lib\site-packages\virtualenv_support\pip-1.5.6-py2.py3-none-any.w
hl\pip\req.py", line 1177, in prepare_files
    url = finder.find_requirement(req_to_install, upgrade=self.upgrade)
  File "U:\Apps\PortablePython\App\lib\site-packages\virtualenv_support\pip-1.5.6-py2.py3-none-any.w
hl\pip\index.py", line 209, in find_requirement
    file_locations, url_locations = self._sort_locations(locations)
  File "U:\Apps\PortablePython\App\lib\site-packages\virtualenv_support\pip-1.5.6-py2.py3-none-any.w
hl\pip\index.py", line 128, in _sort_locations
    sort_path(os.path.join(path, item))
  File "U:\Apps\PortablePython\App\lib\site-packages\virtualenv_support\pip-1.5.6-py2.py3-none-any.w
hl\pip\index.py", line 109, in sort_path
    if mimetypes.guess_type(url, strict=False)[0] == 'text/html':
  File "U:\Apps\PortablePython\App\Lib\mimetypes.py", line 297, in guess_type
    init()
  File "U:\Apps\PortablePython\App\Lib\mimetypes.py", line 358, in init
    db.read_windows_registry()
  File "U:\Apps\PortablePython\App\Lib\mimetypes.py", line 258, in read_windows_registry
    for subkeyname in enum_types(hkcr):
  File "U:\Apps\PortablePython\App\Lib\mimetypes.py", line 249, in enum_types
    ctype = ctype.encode(default_encoding) # omit in 3.x!
UnicodeDecodeError: 'ascii' codec can't decode byte 0xfc in position 32: ordinal not in range(128)

Storing debug log for failure in U:\pip\pip.log
----------------------------------------
...Installing setuptools, pip...done.
Traceback (most recent call last):
  File "U:\Apps\PortablePython\App\lib\runpy.py", line 162, in _run_module_as_main
    "__main__", fname, loader, pkg_name)
  File "U:\Apps\PortablePython\App\lib\runpy.py", line 72, in _run_code
    exec code in run_globals
  File "U:\Apps\PortablePython\App\Scripts\virtualenv.exe\__main__.py", line 9, in <module>
  File "U:\Apps\PortablePython\App\lib\site-packages\virtualenv.py", line 824, in main
    symlink=options.symlink)
  File "U:\Apps\PortablePython\App\lib\site-packages\virtualenv.py", line 992, in create_environment

    install_wheel(to_install, py_executable, search_dirs)
  File "U:\Apps\PortablePython\App\lib\site-packages\virtualenv.py", line 960, in install_wheel
    'PIP_NO_INDEX': '1'
  File "U:\Apps\PortablePython\App\lib\site-packages\virtualenv.py", line 902, in call_subprocess
    % (cmd_desc, proc.returncode))
OSError: Command U:\Docs\Code\flask_b...v\Scripts\python.exe -c "import sys, pip; sys...d\"] + sys.a
rgv[1:]))" setuptools pip failed with error code 2