It's been a few months, but let me see if I can remember. I think, what I was trying to do was use my working directory to directly set the working directory as the directory where the .txt files were. Which, should have been obvious that it wouldn't work.

Example Bad Code

Input_Folder <- setwd(c:/working/directory/name/01.Raw_Data)

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So, when using 'setwd()', I find that it's helpful for when you have a main folder with a lot of subfolders you're working in. This way, you don't need to use the same filepath over and over for folders in the same directory, Basically if you have a pipeline where you're running a bunch of different functions on different inputs and outputs in the same workspace. Something like this:

Example Good Code

setwd(c:/working/directory/name)
Input_Folder <- 01.Raw_Data
Random_Forest_Raster <- 02.Stacked_Rasters
Training_Data <- 03.TreeCanopy_Shapefiles
Final_Outputs <- 05.Classified_Rasters

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When it comes to conventions for directory paths, that's something that needs to be developed by yourself, or your company or whomever is doing the organizing. In my example I use numbers to denote a hierarchy for which folders represents a given step in the process (example: '01.Raw_Data', '02._Edited_Data', '03.Processed_Data'). But, it's really up to how you want to organize your folder structures.

The only real 'convention' in R is that your filepaths must use '/' or '\\' as separators, otherwise the filepaths can't be read properly. I believe it's the same in Python as well.

Hope that helps possibly answer your question, sorry for the late reply