Hmm, the manual is contradictory here..
Quote:


-You can specify up to 32 PATH names, which will be searched in the given sequence. Paths are relative to the current work folder. In order to be able to copy your project to different locations, use relative paths for all files belonging to your project, and absolute paths for all files that are on an absolute location on your hard disk (like template scripts).
-All scripts must be located in the work folder.


We can use absolute paths for files that are on an absolute location on our hard disk like template scripts, but all scripts must be located in the work folder.

It works fine with template scripts and I have all my scripts except the one that is attached to the level in WED in a subdir of my work folder so I guess this limitation is only for the main script..

Have you actually tried it?

shader tutorial