This worked for me. Great Solution.
The for this problem is provided here https://sourceforge.net/p/sevenzip/discussion/45797/thread/55bd794c/#4558 Basically you can use "current directory" if you use the two window view in 7zip and transfer between them instead of using the windows drag and drop functionality. It seems to be a limitation that when you use the drag and drop option 7zip will only use the temp directory.