I checked with 1.1.0 German version WIN98SE: 645m19(Build8693) 

I added a testkit, steps to reproduce:

1. Unzip attached testkit to C:\
   so that you have a folder "C:\test\
2. open 'testfile.sxc'
3. check link to 'opened.sxw'
   expected: writer- document will be opened
   actual: as expected
4. open 'testfile.xls' (which has been created from by "File - Save As") 
   and test hyperlink again
   expected: as above
   actual: as expected
5. so far, so good, now go to 'testfile.sxc' and create a new EXCEL document in
   the same folder by Menu: "File - Save As - EXCEL-Document" with name  
   'testfile2.xls', 
   and then close all OOo files
6. cut and paste folder 'test' from 'C:\' to an other drive 
   and folder, for example D:\TEMP\
   it is important that the folder 'test' does not remain at the old
   location with it's old name
7. start from 2. in 'test' at the new location, and you will see, 
   that again everything works as expected with 'testfile.sxc'
   but not with the ".XLS" - documents, their hyperlinks still lead to "C:\test\
   what shows, that the hyperlinks in the created EXCEL documents changed from 
   "relative" to "absolute"

I can not answer the question, whether EXCEL supports relative links (only if
"yes", this can be a real DEFECT). Could someone please check this? Becuase of
this auestion I did not set keyword "ms_interoperability"

Rainer