Under the CW10.7 install, there is document CodeWarrior Common Features Guide.pdf. Selection "Copy projects into workspace" is mentioned in NOTE, as I highlight below:

As I said before, when select "Copy projects into workspace", all the files IN and UNDER the project folder will be imported into your workspace. and you work on the project files from your workspace. Otherwise, all the project files are still in the original folder as they were.
As you said, in your project, your project can only work with checking "Copy projects into workspace" option. I think this should associate with your project file path setting, I guess your project path setting relies on the workspace path. here is of where to check the path setting. pls check same on your side.

In the end, let me take opportunity to explain why community can't provide phone support to you:
Normally the company provides two kinds of technical support. FREE support and PAID support.
Paid support is always the fastest and most efficient. but this is not my scope, I don't talk more it here.
When our customers post question to community or submit a case to NXP support (How to submit a new question for NXP Support ), they use our free support service.
Community support is a kind of visitable support to public. our purpose is not only solve individual questions, but also post all the working process and solution to public. Thus when other mass customer has similar problem, they can search it out and refer it to their design. although it 's not immediate support, but it can not only help individual but also potentially help dozens or more customers behind. This is why we must input all the working process to community word by word. and this is one of the most important purpose of why we create community.
NXP also has free individual support, as I suggest you in my previous response, to submit a case to support team (How to submit a new question for NXP Support ). You need fill some item for submit the question but you have to. the support team is global team, You can try to request if there is an available support engineer can talk to you for your region.
Have a great day,
Jennie Zhang
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