...Well, maybe I spoke too quick. I thought I understood what I read in the Help Doc, ...but
Whenever I try to only set the Current Workspace and erase anything in the Scratch Workspace, ArcGIS still defaults the Scratch Workspace back to the \Default.gdb\ Workspace and that's where it is saving my outputs. ...Seems to me the Current Workspace is completely ignored.
What version are you on? I seem to recall there was a subtle bug that only showed up under certain (and rare) conditions where stuff like this would happen. I also recall that it was mxd specific. That is, if you open a fresh ArcMap session, everything behaves as it should. Anyway, I'll check the support boards for this issue. There's also a chance (!?!) the doc may be wrong, that a blank scratch workspace defaults to default.gdb.
In the meantime... set your scratch workspace to your current workspace or another suitable known location.