Works fine for me.
In a newly created support module area for 7.0.8.1...
Freshly downloaded and compiled Base 7.0.8.1.
Freshly downloaded and compiled sequencer-2.2.9
The RELEASE.local file one up of the two has:
Create a new directory ttt, set the RELEASE.local one up as a soft link to the RELEASE.local in the new support module area.
$ make
No issues.
The TOP/cfg directory is the install directory for Makefile snippets. The sequencer installing its snippet in that place is intended and expected.
Cheers,
~Ralph