As mentioned in my post above - the "." current directory was in @INC, so it was doing the relative path from the current directory just fine when the relative path was correct. Of course when I changed it to something incorrect, it correctly reported that it could not find config.pl with that relative path from any of the iclude directories in @INC.
The error was in the required file, config.pl. Where, on line 17 (not 18 as reported), there was a typo just after "main'".
"at ../config.pl" in the error message was referring to "in the required file, ../config.pl, at line 18", not "at line 18 of the current script at ../config.pl".
Time flies like an arrow. Fruit flies like a banana.