Issues with setting west manifest path (Sidewalk SDK)

Was following steps here to set up the sidewalk sdk from a blank nRF Connect SDK for VS Code application template using sdk v2.7.0. I noticed immediately that the directory tree doesn't match what's listed in step 1 (the blank application places all of those folders into external/ directory). I attempted the following: 

$ west config manifest.path external/nrf

and verified the path was correct with

$ west config --list

However, the west seems to struggle to find west.yaml in external/nrf:

$ west manifest --validate
FATAL ERROR: can't run west manifest; it requires the manifest, which was not available. Try "west manifest --validate" to debug.

I was able to find a workaround by moving external/* to the workspace root to match the expected directory structure in step 1, but from my testing it seems that the wests manifest tool can't search into subdirectories? Is that behavior expected?

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