Base slave install with nothing in the home directory.

Standard Freestyle project creates the full path $JENKINS_HOME\workspace\<job name>.

Workflow project fails the scm step with abort: The system cannot find the path specified: $JENKINS_HOME\workspace\<job name>

Manually creating the $JENKINS_HOME\workspace directory fixes the issue unless the scm step specifies a sub-directory, in which case the parent of the sub-directory also has to be manually created.

Workflow script was a simple:

node('slave-name') {
  checkout([$class: 'MercurialSCM', ...])
}