diff --git a/mercurial/dirstate.py b/mercurial/dirstate.py
--- a/mercurial/dirstate.py
+++ b/mercurial/dirstate.py
@@ -34,10 +34,14 @@ class dirstate(object):
         cwd = os.getcwd()
         if cwd == self.root: return ''
         # self.root ends with a path separator if self.root is '/' or 'C:\'
-        common_prefix_len = len(self.root)
-        if not self.root.endswith(os.sep):
-            common_prefix_len += 1
-        return cwd[common_prefix_len:]
+        rootsep = self.root
+        if not rootsep.endswith(os.sep):
+            rootsep += os.sep
+        if cwd.startswith(rootsep):
+            return cwd[len(rootsep):]
+        else:
+            # we're outside the repo. return an absolute path.
+            return cwd
 
     def hgignore(self):
         '''return the contents of .hgignore files as a list of patterns.
diff --git a/mercurial/util.py b/mercurial/util.py
--- a/mercurial/util.py
+++ b/mercurial/util.py
@@ -326,6 +326,10 @@ def pathto(root, n1, n2):
     n2 should always be relative to root.
     '''
     if not n1: return localpath(n2)
+    if os.path.isabs(n1):
+        if os.path.splitdrive(root)[0] != os.path.splitdrive(n1)[0]:
+            return os.path.join(root, localpath(n2))
+        n2 = '/'.join((pconvert(root), n2))
     a, b = n1.split(os.sep), n2.split('/')
     a.reverse()
     b.reverse()
diff --git a/tests/test-import b/tests/test-import
--- a/tests/test-import
+++ b/tests/test-import
@@ -32,6 +32,17 @@ hg --cwd a diff -r0:1 > tip.patch
 hg --cwd b import -mpatch ../tip.patch
 rm -r b
 
+echo % hg -R repo import
+# put the clone in a subdir - having a directory named "a"
+# used to hide a bug.
+mkdir dir
+hg clone -r0 a dir/b
+hg --cwd a export tip > dir/tip.patch
+cd dir
+hg -R b import tip.patch
+cd ..
+rm -r dir
+
 echo % import from stdin
 hg clone -r0 a b
 hg --cwd a export tip | hg --cwd b import -
diff --git a/tests/test-import.out b/tests/test-import.out
--- a/tests/test-import.out
+++ b/tests/test-import.out
@@ -30,6 +30,14 @@ adding file changes
 added 1 changesets with 2 changes to 2 files
 2 files updated, 0 files merged, 0 files removed, 0 files unresolved
 applying ../tip.patch
+% hg -R repo import
+requesting all changes
+adding changesets
+adding manifests
+adding file changes
+added 1 changesets with 2 changes to 2 files
+2 files updated, 0 files merged, 0 files removed, 0 files unresolved
+applying tip.patch
 % import from stdin
 requesting all changes
 adding changesets
diff --git a/tests/test-walk b/tests/test-walk
--- a/tests/test-walk
+++ b/tests/test-walk
@@ -59,3 +59,9 @@ hg rm fenugreek
 hg debugwalk fenugreek
 touch new
 hg debugwalk new
+cd ..
+hg -R t debugwalk t/mammals/skunk
+mkdir t2
+cd t2
+hg -R ../t debugwalk ../t/mammals/skunk
+hg --cwd ../t debugwalk mammals/skunk
diff --git a/tests/test-walk.out b/tests/test-walk.out
--- a/tests/test-walk.out
+++ b/tests/test-walk.out
@@ -95,3 +95,6 @@ fifo: unsupported file type (type is fif
 m  fenugreek  fenugreek  exact
 m  fenugreek  fenugreek  exact
 f  new  new  exact
+f  mammals/skunk  t/mammals/skunk  exact
+f  mammals/skunk  ../t/mammals/skunk  exact
+f  mammals/skunk  mammals/skunk  exact