Windows 7 and Windows 8

Tried version 2.63 and 2.65a
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When you use a Proxy custom Directory. if relative file path is ticked the directory path is still absolute.
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Go to the video sequence editor - Add an image sequence or movie clip to the time line - in the properties panel tick proxy/timecode -
tick proxy custom directory - open the directory browser button - ensure Relative path is ticked - select a folder to put the proxy in from the bookmarks - hit enter -

Go back to the properties panel and look at the Directories box.

My example would be as follows:
C:\Users\oliver\Documents\Film Project\FINAL\RENDERS\Proxies\

This is not Relative.

Workaround is to type it in manually:
//..\RENDERS\Proxy\