How does Microstation know where to look for the ucf?

I'm working to better understand how workspaces function in microstation, but I've hit a roadblock. 

I understand that the .ucf file specifies active workspace components, but I don't understand how microstation knows where to find the .ucf file. Mine is referencing a seperate drive, other than the C drive.

Here's my current About Workspace. Nothing in my current .ucf seems to point to the Y drive, but it finds it none the less.

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