My job is set to check out a svn URL to a specified directory in the workspace. That is, http://....../trunk checks out to 'gloop'.
I have a settings.xml checked in as trunk/etc/hudson-settings.xml.
So, in the workspace, my settings file is located at gloop/etc/hudson-settings.xml.
If I enter gloop/etc/hudson-settings.xml, I get a red warning that the file does not exist. If I enter just etc/hudson-settings.xml, not warning, but it doesn't work.