I had a similar problem (and VBScript or PowerShell was not an option) and the code I found in this article did not work for me. I had problems with OS versions and language versions. After some experiments I've come to this solution:
for /f "usebackq tokens=2,3*" %%A in (`REG QUERY "HKCU\Software\Microsoft\Windows\CurrentVersion\Explorer\User Shell Folders" /v "Desktop"`) do if %%A==REG_EXPAND_SZ call :reparse set desktopdir=%%B
echo %desktopdir%
goto :EOF
:reparse
%*
goto :EOF
This code works for me in English and Polish versions of Windows 7 and Windows XP.
The :reparse subroutine allows for delayed expansion of environment variables.