The Local Shared Root Path is your mounted directory that other slave machines can also access for files. Typically this is your shared drive that all render farm machines, and your own machine have mounted. Note that it should use forward slash in the path. An example would be:
The Working Directory is where the PDG temporary, intermediate, and results files will be generated in. This should be relative to your Local Shared Root Path, so that all slave machines can use the same directory to store and retrieve files. An example would be:
This would result in files being generated in:
The problem with using $HIP as your Working Directory was that it was appending an absolute path (your HIP file path) to the Local Shared Root Path. Change the Working Directory from $HIP to a relative path, and it should work.