Emacs23 bibtex-ing a file changes directory and fails

Binary package hint: emacs23

I have two machines running Emacs23 (one Ubuntu 9.10x64, the other Windows XP), both with the same stuff installed and the same .emacs file; however, I am having a problem with the Ubuntu machine and bibtex. When I bibtex a LaTeX file, emacs first inserts a CD to the emulated command line and then tries to do the bibtex. Obviously, because I am no longer in the same directory as the aux file, the bibtex fails.
To test and ensure it wasn't just my setup, I loaded VirtualBox with a fresh copy of Ubuntu 10.04. I installed emacs23 (sudo apt-get install emacs23) and left it without any configuration (.emacs file or any of the extras files) and attempted to bibtex a file. Unfortunately, I got the same results. Emacs23 on Ubuntu inserts a CD (just 'cd' no path so it goes to your home directory) to the emulated command line and then attempts to execute the bibtex command (e.g. "bibtex Example", notice there is no path here to indicate where the aux file is and, unlike in Windows, the name of the aux is not quoted out).