This worked for me on Windows XP (I didn't have an environment variable LANG, and creating one didn't help) ...
Error text in sybinit.err:
The context allocation routine failed when it tried to load localization files!!
One or more following problems may caused the failure
Your sybase home directory is c:\sybase. Check the environment variable SYBASE if it is not the one you want!
Using locale name "1033" defined in environment variable LANG
Locale name "1033" doesn't exist in your c:\sybase\locales\locales.dat file
Solution:
Add the following line to the section [NT] in the locales.dat file…
locale = 1033, us_english, cp850
(Just copy the last line in the section, which will be "locale = default..." and change 'default' to '1033' or whatever locale name appears in sybinit.err)