I always use Option Explicit. Based on it, I added some Dim's to your code. I also set an input parameter. Doing this, it worked fine for me.
[vba]Sub Test()
SearchFiles ThisWorkbook.Path
'Debug.Print Application.Path
'SearchFiles Application.Path
End Sub

Sub SearchFiles(strStartPath As String)

Dim i As Long, z As Long, Rw As Long
Dim ws As Worksheet
Dim y As Variant
Dim fLdr As String, Fil As String, FPath As String

Dim filefound As Long
Dim Msg As Variant
Dim Title As String
Dim Response As Variant

y = "*"
If y = False And Not TypeName(y) = "String" Then Exit Sub

fLdr = strStartPath

With Application.FileSearch
.NewSearch
.LookIn = fLdr
.SearchSubFolders = True
.Filename = y
Set ws = ThisWorkbook.Worksheets.Add(Sheets(1))
On Error GoTo 1

2: ws.Name = "File Search Results"
On Error GoTo 0
If .Execute() > 0 Then

filefound = 1

For i = 1 To .FoundFiles.Count
Fil = .FoundFiles(i)

FPath = Left(Fil, Len(Fil) - Len(Split(Fil, "\")(UBound(Split(Fil, "\")))) - 1)
If Left$(Fil, 1) = Left$(fLdr, 1) Then
If CBool(Len(Dir(Fil))) Then
z = z + 1
ws.Cells(z + 1, 1).Resize(, 4) = _
Array(Dir(Fil), _
FileLen(Fil) / 1000, _
FileDateTime(Fil), _
FPath)
ws.Hyperlinks.Add Anchor:=Cells(z + 1, 1), _
Address:=.FoundFiles(i)
End If
End If
Next i
End If
End With

ActiveWindow.DisplayHeadings = True

If filefound = 1 Then

With ws
Rw = .Cells.Rows.Count
With .[A1: D1]
.Value = [{"File Name","File Size (KB)","Last Modified", "Path"}]
.Font.Underline = xlUnderlineStyleSingle
.Font.Bold = True
.EntireColumn.AutoFit
.HorizontalAlignment = xlCenter
End With
'.[E1:IV1 ].EntireColumn.Hidden = True
On Error Resume Next
'Range(Cells(Rw, "A").End(3)(2), Cells(Rw, "A")).EntireRow.Hidden = True
Range(.[A2 ], Cells(Rw, "C")).Sort [A2 ], xlAscending, Header:=xlNo
End With

Else 'If no file found

Msg = "No files were found. Please change the specifications."
Title = "No Files Found"
Response = MsgBox(Msg, vbOKOnly, Title)

If Response = 1 Then
End If

End If

Application.ScreenUpdating = True

Exit Sub

1: Application.DisplayAlerts = False
Sheets("File Search Results").Delete
Application.DisplayAlerts = True
GoTo 2

End Sub



[/vba]