[tex-k] problems with dvips search paths....

[Karl Berry]

    Current working directory had been removed someday

In TL 2003, looks to me.

    from TEXCONFIG due to some reason, which I don't remember.

Security paranoia, as I recall.

    See the output of
    kpsewhich -var-value=TEXCONFIG

Yep, or if you really want to see the complete path with everything
expanded, 
kw --expand-path=\$TEXCONFIG
(add | tr : '\n' to get each dir on its own line).

    and put config.foo under a suitable subdirectory

I didn't check, but I seem to recall that there's enough options around
that it'd also be possible to add any given directory to the TEXCONFIG
path via ~/.dvipsrc or some such.  Not sure, though.