stryku authored May 15, 2017 and Brad King committed May 17, 2017

The fix in commit v3.8.1~4^2 (source_group: Fix TREE with root that is
not current source dir, 2017-04-20) accidentally broke support for
specifying paths relative to the source directory.  Fix it and add a
test covering the case.

While at it, fix a typo in a variable name.

Fixes: #16876