Here's one of my configs. It works with no issues using relative paths. I have used this on my C: and from a portable HDD.
My setup is a folder on the root of the drive called Emulation. The folder layout looks a bit like this but with more entries.
Emulation-
Emulators-
Retroarch
Front Ends-
Attract Mode
Systems-
Consoles-
Atari 2600-
Boxes
Roms
Videos
Wheels
Utilities
JoyToKey
And here's my config file for Atari 600
# Generated by Attract-Mode v2.2.1
#
executable ..\..\Emulators\Retroarch\Retroarch.exe
args "[romfilename]" -L cores\stella_libretro.dll -fullscreen
rompath ..\..\Systems\Consoles\Atari 2600\Roms
romext .zip
system Atari 2600
info_source thegamesdb.net
artwork flyer
artwork marquee
artwork snap ..\..\Systems\Consoles\Atari 2600\Videos
artwork wheel ..\..\Systems\Consoles\Atari 2600\Wheels
Basically, using my folder setup, the starting point is the Attract Mode directory. From there, the first ..\ drops back to the Front Ends directory, then the second ..\ drops to the Emulation directory - from there it goes into \Emulators then into \Retroarch to run retroarch.exe. The paths for the roms work the same way, it tells retroarch to drop down 2 folders, then go into systems\consoles\atari 2600\roms and run the romfilename.