So I have models and a .cfg all in the same folder. I remember that I was told that CADWorx looks for the cfg inside the current folder where you are opening the drawing from. I know it use to work rather well and all the time. Now it seems that it is not working at all and If i create a drawing file, save it to the same folder as the cfg, reopen it, I still have to reload the cfg to have that drawing use the right PRJ.

Is there something I should be looking for in the setup?

I keep all my cfg's in a cfg folder not with models or projects

They screwed up the CFG selection hierarchy a few years ago and its been a battle trying to get them to change it back. Now a days the first choice when opening a drawing is the CFG that was saved with the DWG, which in turns renders all the other possible CFG selection possibilities useless.
In order to escalate the issue, file a SR with the support team asking for them to correct the CFG selection hierarchy to load the CFG in the folder first.

I was going to check on that, thanks (sort of ) for the confirmation. I suspect deleting the CPM block in the drawing would cause a reset using the tree protocols.