Matt Lundin wrote:
>Aidan Gauland <aidalgol@no8wireless.co.nz> writes:

>> If I create a link with C-c C-l and give it a relative "file:" link, a
>> link is created with an absolute path.  For example, C-c C-l
>> file:../foo.org <RET> foo puts
>> [[file:~/path/to/working-directory/foo.org][foo]] in the buffer.  I was
>> expecting [[file:../foo.org][foo]].

>That is the default behavior. You can change it by setting
>org-link-file-path-type to relative.

And in addition there was a fix pushed to repo.or.cz

,----
| commit acb8bcfba7023b362a7fbe9615bb167a046ad26d
| Author: Carsten Dominik <carsten.dominik@gmail.com>
| Date:   Tue Jul 13 12:53:47 2010 +0200
|
|     Fix relative path creation when making a file link
|
|     * lisp/org.el (org-insert-link): Correctly determine if we should use
|     a relative path.
|
|     Aidan Gauland writes:
|
|     > If I create a link with C-c C-l and give it a relative "file:" link, a
|     > link is created with an absolute path.  For example, C-c C-l
|     > file:../foo.org <RET> foo puts
|     > [[file:~/path/to/working-directory/foo.org][foo]] in the buffer.  I was
|     > expecting [[file:../foo.org][foo]].
`----

HTH,
  -- David
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