diff --git a/README.md b/README.md
index 28598d0..9276078 100644
--- a/README.md
+++ b/README.md
@@ -256,6 +256,7 @@ func _on_plugin_updated(plugin):
 ## Known Limitations
 
 - Godot always show errors from plugin repositories in `./plugged` even with `.gdignore` (See [#32](https://github.com/imjp94/gd-plug/issues/32))
+  - This can be worked around by placing the `.plugged` folder within `addons`, e.g. `addons/gd-plug/.plugged`
 - Sometimes random .import files will be unable to remove, while the reason behind it still remains unknown.
   - Workaround: Read output for those .import files that failed to remove, and manually delete them.
 - `autoload` script references in project setting are not cleared as plugin uninstalled.
diff --git a/addons/gd-plug/plug.gd b/addons/gd-plug/plug.gd
index 8b20175..8adb7a0 100644
--- a/addons/gd-plug/plug.gd
+++ b/addons/gd-plug/plug.gd
@@ -575,7 +575,7 @@ func remove_installed_plugin(plugin_name):
 	_mutex.unlock()
 	return result
 
-func directory_copy_recursively(from, to, args={}):
+func directory_copy_recursively(from, to, args={}, from_root = from):
 	var include = args.get("include", [])
 	var exclude = args.get("exclude", [])
 	var test = args.get("test", false)
@@ -589,26 +589,21 @@ func directory_copy_recursively(from, to, args={}):
 		while not file_name.is_empty():
 			var source = dir.get_current_dir() + ("/" if dir.get_current_dir() != "res://" else "") + file_name
 			var dest = to + ("/" if to != "res://" else "") + file_name
+			var include_test_source = source.erase(0, from_root.length())
 			
-			if dir.current_is_dir():
-				dest_files += directory_copy_recursively(source, dest, args)
-			else:
-				for include_key in include:
-					if include_key in source:
-						var is_excluded = false
-						for exclude_key in exclude:
-							if exclude_key in source:
-								is_excluded = true
-								break
-						if not is_excluded:
-							if test:
-								if not silent_test: logger.warn("[TEST] Writing to %s" % dest)
-							else:
-								dir.make_dir_recursive(to)
-								if dir.copy(source, dest) == OK:
-									logger.debug("Copy from %s to %s" % [source, dest])
-							dest_files.append(dest)
-						break
+			if !_test_path_includes_any_key(exclude, include_test_source):
+				if dir.current_is_dir():
+					dest_files += directory_copy_recursively(source, dest, args, from_root)
+				else:
+					if _test_path_includes_any_key(include, include_test_source):
+						if test:
+							if !silent_test:
+								logger.warn("[TEST] Writing to %s" % dest)
+						else:
+							dir.make_dir_recursive(to)
+							if dir.copy(source, dest) == OK:
+								logger.debug("Copy from %s to %s" % [source, dest])
+						dest_files.append(dest)
 			file_name = dir.get_next()
 		dir.list_dir_end()
 	else:
@@ -616,6 +611,18 @@ func directory_copy_recursively(from, to, args={}):
 	
 	return dest_files
 
+func _test_path_includes_any_key(keys, path):
+	for key in keys:
+		if key.begins_with("res://"):
+			key = key.erase(0, "res:/".length())
+			if path.begins_with(key):
+				return true
+			continue
+
+		if key in path:
+			return true
+	return false
+
 func directory_delete_recursively(dir_path, args={}):
 	var remove_empty_directory = args.get("remove_empty_directory", true)
 	var exclude = args.get("exclude", [])