Legal Engineer -
TestStand does expose the "containing project directory" in the search directories dialog box. It only has meaning for the FindFile API function when the "currentSequenceFile" parameter is set to a project file. I agree that it is confusing in that it does not apply to steps finding code modules. If you unchecks this setting and you reload a workspace, any projects that use relative paths to specify their files may no longer find their files.
In general the suggestion is to leave it checked and ignore it.
Scott Richardson (NI)
Scott Richardson
https://testeract.com