The initial CreatePrefab flow was trying to go from absolute -> relative -> absolute path before the file had ever been saved, so the relative -> absolute path conversion generated an error and always produced a project-relative path, even if the initial path was in a gem. For example, trying to save "c:/o3de/Gems/Camera/Assets/Entity1.prefab" would instead create "c:/o3de/AutomatedTesting/Entity1.prefab". This change preserves the absolute path throughout the initial creation flow so that the file is saved in the correct location.
Mike Balfour
895bbafa9e