I’ve never had to this manually myself, but from looking at the builds that I have on my computer, the “root” location is the same folder that contains the .sln file (Or in a project that doesn’t have source, look for the .uproject file) which applies to both an Engine installation and a Project directory. The dirs file is going to be going into folders from that point, as it may be including Samples and other folders that are on the same level as the Engine folder.
There shouldn’t be a problem with placing it in each one of those engine installations either.