Convert to JPEG action fails when packaged as application

Question

I am having problems with an automator workflow I have set up. The gist of the process is that I specify some images, both tiff and jpeg (or possibly all tiff), and the workflow copies and resizes them into thumbnail, medium, and full size images, and then filters out any images that were already JPEG, and converts the rest to JPEGs, using the "Change type of images" action. It then uploads them to a webspace to be used by a program that only accepts JPEGs.
This all works wonderfully, until I package the workflow as an application instead of leaving it as an open workflow. When I do that, the workflow processes normally, and says it completed successfully, but uploads the TIFF files, without having converted them to JPEG. I've watched the folder actions, and it appears to do something during the convert to JPEG step, but simply ends up recreating the TIFF.
This happens both when the filter step is inserted (that sorts TIFFs and JPEGs) and when it is removed, but again, only when the workflow is packaged as an application.
I have attempted to mask the workflow by creating a second workflow which simply runs the first, and then packaging that one as an application, but when the second workflow is run, either as a workflow or as an app, it appears to produce the same problem.
This happens in both 10.4 and 10.5, on multiple computers.
Any help would be appreciated.

Answer 1

You don't mention specifically what you are doing, but if it is something like using "Watch Me Do", that is notoriously unreliable.  If you are using "Run Shell Script", the action runs with a default environment and does not contain anything from your user setup, such as $PATH.