Checking Reuse all tools ensures that LispWorks uses an existing tool rather than starting up a new copy. For example, if an editor is already open, choosing File > Open and selecting a new file causes the file to be opened in the existing editor.
Check Use recent directory for opening files to make operations such as File > Open use the directory of the file most recently edited as the default directory in the file dialog. Deselect this option to make the dialog's default directory be the current working directory.
Note: this option does not affect the Editor tool, for which the file dialog always uses the directory of the currently visible file as the default directory.