The override/alternate directory for each project and folder is maintained inside a local file - not on the server. The default working folder is kept on the server, and any time you update it the changes are propigating to all other users.
The shortcut xml has no place to specify a working folder.
If you don't need the StarTeam GUI, stcmd allows you to specify a new working folder for most operations with the -rp and -fp flags.
If the projects that need this common library code are in their own views, you could also share the common project into a new subfolder within those other projects. You can use a relative path for this new subfolder that includes .. to move it outside the containing project's folder. This lets you use common code in many projects while allowing you to specify the location of that common code per project.
Shares come with some overhead, so be aware, but other than that it would probably work for what you're trying to do.