Hi, that's correct. In the built-in library, materials are stored in a relative path to the "lib" folder.
But it's not necessary to modify the index.xml. Just keep the same structure level as the default installation.
For example, to move everything to O:\3D\RailClone_Library, copy "lib" and "matlib" in the same level:
In this way, relative paths don't change and the index.xml will work without changes.
The reason to use relative paths, it that actually doesn't exist a "$(LIBMATPATH)" macro in the code.
Although there is a registry key which defines the path of "matlib", currently is used only by Update Manager to copy the files.