I have the latest official version from the website (9.20 64-bit). Since moving large files from C to another drive is very slow I decided to change 7zip's temp folder to "E:\7zip Temp" but it doesn't use it.
Here's a screenshot of the settings:
And yet, when unpacking large archives:
Have a closer look on the last pic and you'll see it reads "C:\Users.....\7zblabla.tmp" which means 7zip is still using the system temp folder instead of the one I've set.
I am having a similar issue.
The extract option always brings up the folder the zip is in, not the folder I have specified. I have the removable drives checkbox unchecked.