What are the contents of %INC when it works and when it doesn't work? The only code in your snippet and IO::Prompt that depend on the path is use.

Wouldn't hurt to tell us what $IO::Prompt::VERSION is (again, when it works and when it doesn't work).

One possible source of newlines (in 0.99.4) is

sub _clear {
    return unless $_[0];
    open my $OUT, ">/dev/tty" or croak "Cannot write to terminal: $!";
    print {$OUT} "\n" x 60;
    $clearfirst = 0;
}
[download]

But that requires -clear, -clearfirst or -f to be specified as far as I can tell.