How does Tomcat locate webapps directory? Where is this location set? Is it a relative directory?
It can be changed in the $CATALINA_BASE/conf/server.xml in the . See the Tomcat documentation, specifically the section in regards to the Host container:
Tomcat 6 Configuration
Tomcat 7 Configuration
The default is webapps relative to the $CATALINA_BASE. An absolute pathname can be used.
Hope that helps.