Hi,
Your understanding of "." and ".." is correct, don't worry
LabVIEW treats library files as folders. The URLs are relative to the "inside" of that folder. Notice that:
The class private data's URL is "Setting Element.ctl" (no "../"!)
The VI's URL is "../Pseudo Array - Remove Row.vi"
Where are the .ctl file and the .vi file on disk?
The .ctl file is embedded inside the .lvclass file.
The .vi file is not embedded -- instead, it lives one level above the .ctl file, on the same level as the .lvclass file.