Do you have a small test case that shows how you have this set up and expect work?
In general the Elements build (EBuild) acts on files based on their build action and file name; their file location relative to the project has no relevance to what is or isn’t done to the files, ie if you have
<Compile Include="Foo.pas"/>
<Compile Include="x/Bar.pas"/>
<Content Include="Foo.txt"/>
<Content Include="x/Bar.txt"/>
Foo and Bar will be acted upon in the same way, no matter their relative or absolute path; Bar.txt would not be copies into a subfolder called “x”, just because that’s where art happens to originale.
That is the expected behavior, currently.
“Copy Destination” looks to maybe be a VS thing, but its not a value that EBuild (currently) handles or honors in any way.