Yep. That was it.
Would it be so hard to code an error message into all your apps to log in syslog that the app needs to be in the /Applications folder?
Or to actually ask the user if they want to move it there? If they say no, have it delete itself.
Or change the art in the install DMG to saying YOU MUST MOVE APP to /Applications for it to work.
Personally, I can't think of any technical reason why an App would only run in /Applications and no where else. That's just sloppy coding. But not bothering to check that this is the problem is worse. It's lazy coding.