Once again MicroStationCONNECT configuration is very short sided when it comes to workset configuration.
If want want to move the dgnws file location to be inside the workset folder directory (because you know its project info not config info so it should go with the project) YOU CAN NOT SET THIS LOCATION AT THE WORKSET LEVEL. I can not set this variable in the workspace level because the location is unknown until the workset is selected and is being set in the workset cfg file, so please do not suggest that as a solution as Bentley support couldn't understand this and suggested setting it at the workspace level multiple times in the same service request even i told them repeated this does not fix the problem.
setting USTN_WORKSETDGNWS in the workset cfg file does not work for reading or written custom properties. but then it does work for reading/writing to the sheet index. MicroStation cant even consistently read things out of the same file.
the number one request in Ohio from consultants to OhioDOT was to have the ability to put the workset in different sub folders to better organize their projects. out of the box functionality does not support creating worksets in different directories but this can be achieved by manually creating the workset. when doing this the only thing that seems to not be working is the ability to read/write custom properties.