What and how are you clipping?
You can clip to any TW file that that has the plugin and that has been “docked”. It’s physical location is irrelevant. Hower …
This is an extension that allows you to save media (e.g. an image) to a directory, and create (if I recall) the appropriate tiddler. Unfortunately, that directory has to be below your downloads directory. Also unfortunately, it is called “media”, which means it isn’t compatible with the rest of TW , which uses “files” as the place to serve up media files. So you can’t use it to collect images and then drag the tiddlers over to a normally structured wiki without remapping the _canonical_uri field.