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Relative path cannot be found

See original GitHub issue

I am on the latest Poetry version.
I have searched the issues of this repo and believe that this is not a duplicate.
If an exception occurs when executing a command, I executed it again in debug mode (-vvv option).
OS version and name: Windows 10
Poetry version: 1.1.3
Repo with bug: https://github.com/jonapich/test-poetry-relative-paths

Issue

Depending on a module through a relative path that also depends on a relative path broke between 1.0.10 and 1.1.0.

The issue only seems to occur with nested packages. It works with one relative path, but if this path also contains a relative path dependency, that’s when the bug occurs.

Following the steps in the readme of the linked repository will lead to this error:

  Command C:\Users\user\AppData\Local\pypoetry\Cache\virtualenvs\test-functools-dloyykXv-py3.8\Scripts\pip.exe install --no-deps -U C:/Users/user/code/test-poetry-relative-paths/test-functools/test-poetry-relative-paths/test-testing errored with the following return code 1, and output:
  Processing c:\users\user\code\test-poetry-relative-paths\test-functools\test-poetry-relative-paths\test-testing
    Installing build dependencies: started
    Installing build dependencies: finished with status 'done'
    Getting requirements to build wheel: started
    Getting requirements to build wheel: finished with status 'done'
      Preparing wheel metadata: started
      Preparing wheel metadata: finished with status 'error'
      ERROR: Command errored out with exit status 1:
       command: 'C:\Users\user\AppData\Local\pypoetry\Cache\virtualenvs\test-functools-dloyykXv-py3.8\Scripts\python.exe' 'C:\Users\user\AppData\Local\pypoetry\Cache\virtualenvs\test-functools-dloyykXv-py3.8\lib\site-packages\pip\_vendor\pep517\_in_process.py' prepare_metadata_for_build_wheel 'C:\Users\user\AppData\Local\Temp\tmp6_drxiht'
           cwd: C:\Users\user\AppData\Local\Temp\pip-req-build-6vl779_r
      Complete output (16 lines):
      Traceback (most recent call last):
        File "C:\Users\user\AppData\Local\pypoetry\Cache\virtualenvs\test-functools-dloyykXv-py3.8\lib\site-packages\pip\_vendor\pep517\_in_process.py", line 280, in <module>
          main()
        File "C:\Users\user\AppData\Local\pypoetry\Cache\virtualenvs\test-functools-dloyykXv-py3.8\lib\site-packages\pip\_vendor\pep517\_in_process.py", line 263, in main
          json_out['return_val'] = hook(**hook_input['kwargs'])
        File "C:\Users\user\AppData\Local\pypoetry\Cache\virtualenvs\test-functools-dloyykXv-py3.8\lib\site-packages\pip\_vendor\pep517\_in_process.py", line 133, in prepare_metadata_for_build_wheel
          return hook(metadata_directory, config_settings)
        File "C:\Users\user\AppData\Local\Temp\pip-build-env-8git_pgc\overlay\Lib\site-packages\poetry\core\masonry\api.py", line 34, in prepare_metadata_for_build_wheel
          poetry = Factory().create_poetry(Path(".").resolve())
        File "C:\Users\user\AppData\Local\Temp\pip-build-env-8git_pgc\overlay\Lib\site-packages\poetry\core\factory.py", line 91, in create_poetry
          self.create_dependency(name, constraint, root_dir=package.root_dir)
        File "C:\Users\user\AppData\Local\Temp\pip-build-env-8git_pgc\overlay\Lib\site-packages\poetry\core\factory.py", line 242, in create_dependency
          dependency = DirectoryDependency(
        File "C:\Users\user\AppData\Local\Temp\pip-build-env-8git_pgc\overlay\Lib\site-packages\poetry\core\packages\directory_dependency.py", line 36, in __init__
          raise ValueError("Directory {} does not exist".format(self._path))
      ValueError: Directory ..\test-lib does not exist