This bug report is about the Windows-implementation of the GetBasePath-function which can be found in "src/filesystem/windows/SDL_sysfilesystem.c". The implementation is incorrect and non-portable, mainly due to a wrong usage (and linkage) of the GetModuleFileName-function (Win32 API). Another issue, albeit less important, is the hardcoded limit to the path's length which could very well exceed MAX_PATH. Eventhough I strongly discourage anyone from using this function, I have flagged the bug severity as "minor" as the GetBasePath-function isn't being used by SDL internally - it is however exported and declared in the public API headers.

As stated by MSDN (link: http://msdn.microsoft.com/en-us/library/windows/desktop/ms683198(v=vs.85).aspx):

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Starting with Windows 7 and Windows Server 2008 R2, Psapi.h establishes version numbers for the PSAPI functions. The PSAPI version number affects the name used to call the function and the library that a program must load. If PSAPI_VERSION is 2 or greater, this function is defined as K32GetModuleFileNameEx in Psapi.h and exported in Kernel32.lib and Kernel32.dll. If PSAPI_VERSION is 1, this function is defined as GetModuleFileNameEx in Psapi.h and exported in Psapi.lib and Psapi.dll as a wrapper that calls K32GetModuleFileNameEx.
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Programs that must run on earlier versions of Windows as well as Windows 7 and later versions should always call this function as GetModuleFileNameEx. To ensure correct resolution of symbols, add Psapi.lib to the TARGETLIBS macro and compile the program with -DPSAPI_VERSION=1. To use run-time dynamic linking, load Psapi.dll. K32GetModuleFileNameEx.
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Then about the hardcoded limit to the path's length. While I expect the big majority of the users running their application from a path that fits within MAX_PATH chars, the path length could very well exceed MAX_PATH. Now there are various approaches to returning a correct path. One such approach could be to call GetModuleFileNameEx in a loop, with every iteration increasing the nSize-value and increasing the size of the receiving buffer, until the returned nSize-value no longer increases.