HammerAddons
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Srctools.vdf mistakingly tells that the paths are relative to the game root
In srctools.vdf, the comment says that the path(s) below (for example in searchpaths, studiomdl configs etc.) are relative to the game root, which is completely wrong. They are actually relative to the file directory, as I've tested and seen, game root relative paths don't work.

Having same issue - either you have to dump VMFs in game files or use Portal 2. Why is config file generated next to VMFs and not in postcompile location though?