Where are the physical font files stored?

They are stored in the Windows SxS cache, where hard links are created from. Here is an example (64b):

C:\Windows\WinSxS\amd64_microsoft-windows-f..truetype-arialblack_31bf3856ad364e35_6.2.8250.0_none_cd833951c51cc8e6

Searching C:\Windows\WinSxS for truetype- will give all these folders, searching for *.ttf or *.otf will give all the font files that are stored in that folder. The reason your application doesn't see these files is because it doesn't support the aggregating approach the Control Panel uses. At best you can attempt to type the file name and get around...

For an overview, use dir %SYSTEMROOT%\Fonts.

The Link Shell Extension allows you to enumerate the hard links in the Link Properties tab:

C:\Windows\Fonts is indeed where the font files are stored (assuming that c:\windows is the operating system root, which is usually the case). You can double-check this by starting a command-line window (type cmd.exe in the Start Menu) and saying:

cd c:\windows\fonts
dir

I suspect that TypeLight is misbehaving, perhaps because Fonts is considered a special folder by the Windows shell.

Explorer will aggregate font files in C:/Windows/Fonts, making the directory sometimes unintuitive to navigate.

To see the Font hardlinks as files, paste the host address into the Explorer address bar:

\\{ComputerName}\c$\Windows\Fonts

The computer name can be seen by right-clicking This PC on Desktop, and then viewing Properties.

See also: How do I browse fonts as files in Windows Explorer