Okay so, I store the tf state in the cloud on a Storage Account blob.

When I played around with the paths, at some point terraform left a resource in the state that contained this '../../' path (I used it at some point, while trying to separate this part to a module).

When I updated the state file (effectively using a new state) on the storage container, things cleared up after an init -reconfigure. both paths prefixed with ${path.root} work fine.