Steam Copy not Working outside Steam Directory

[YellowFin]

I have tried to get a second copy of a steam version of Silent Hunter 4 working outside of the Steam directory tree (for modding/mod testing purposes).

Steps taken:

1. Uninstall SH4 and SH4 U-Boat missions in Steam application (to clean up old installations)
2. Install SH4 and SH4 U-Boat missions in Steam application
3. Copy ../steam/steamapps/common/Silent Hunters of the Pacific to C:/Games/Silent_Hunter_4
4. Double click sh4 application executable -> Application Load Error 2:0000065558 (or similar)

I have tried switching off Windows Defender.
I have tried deleting all files from steam except the steamapps directory and the steam application executable itself, in order to get a fresh steam install.
I've also tried this with Steam Beta.

I can get a second copy of SH4 up and running under the standard Steam directory (../steam/steamapps/common) though.

Any pointers to get a working clean installation of SH4 outside of C:/../steamapps?