How to set the DB2INSTANCE environmental variable properly?

hi,
when i try to start the db2 server by running db2start.exe in C:\IBM\SQLLIB\BIN, i got the following error. can somebody please tell me how can i set the DB2INSTANCE variable properly.
i have logged the DB2INSTANCE name in a response file.
it has the following properties: PROD=ENTERPRISE_SERVER_EDITION
INSTALL_OPTION=SINGLE_PARTITION
LIC_AGREEMENT=ACCEPT
FILE=C:\IBM\SQLLIB\
INSTALL_TYPE=TYPICAL

LANG=EN
DAS_CONTACT_LIST=LOCAL

DATABASE=TOOLS_DB
TOOLS_CATALOG_DATABASE=TOOLS_DB
TOOLS_CATALOG_SCHEMA=SYSTOOLS
TOOLS_DB.DATABASE_NAME=TOOLSDB

INSTANCE=DB2

TOOLS_DB.INSTANCE=DB2
TOOLS_DB.LOCATION=LOCAL
DB2.NAME=DB2
DEFAULT_INSTANCE=DB2
DB2.SVCENAME=db2c_DB2
DB2.DOMAIN=OPENTEXT
DB2.DB2COMM=TCPIP
DB2.PORT_NUMBER=50000
DB2.AUTOSTART=YES
DB2.USERNAME=vkavala
DB2.PASSWORD=243249341290417150409412164
ENCRYPTED=DB2.PASSWORD
DAS_USERNAME=vkavala
DAS_PASSWORD=243249341290417150409412164
ENCRYPTED=DAS_PASSWORD
DAS_DOMAIN=OPENTEXT
DB2_EXTSECURITY=YES
DB2_USERSGROUP_NAME=DB2USERS
DB2_ADMINGROUP_NAME=DB2ADMNS

Thanks In Advance,
Vinay