I have seen this happen two different times:
1) First case was a DEU problem whereby the user ran the "Analyze System and Archive Components" option from the Pervasive System Analyzer, and accidentally archived off everything from the C:\PVSW\BIN directory.
2) Second case was an in-place upgrade of an environment that had PSQL2000i previously and had leveraged the "Network-based installation", which allowed clients to pull their files from the server directly. After the server upgrade, we went on to upgrade clients, and the process of upgrading the clients archived off the files from the "old client" folder -- which incidentally now contained the server engine! To fix this, we had to manually blow away the registry entry, then uninstall the old "network-installed" components, and then reinstall the correct client.