VC2.3 not recognizing SQL.INI

Migrating Workbench 4.x to VC2.3.

Created Native project with precompiler COBSQL for Sybase 12.5 imbedded SQL. Using EXEC SQL CONNECT statement for database connection however VC is not recognizing SQL.INI file to make connection.  

Sybase Open Client is working properly as I tested with command isql -v. Returns proper version info. Also using isql to select table data.

I am assuming this is a VC 2.3 configuration issue however I have not found a solution.

Thanks for any discussion.