At the root of this issue is each member of the family is managed as a separate CAD document, so each is evaluated against the OIR. There is no requirement that these separate documents are stored in the same folder; certainly good practice but not a requirement. It is currently requiring the users to ensure the location is set to match at check-in, or move afterwards. Sure seems to make sense that a new instance would inherit the generic's location at check-in.
From PTC: "To have instances inherit the generic folder location would require enhancement request submitted to Product Management."