Using ArcGIS 10.3.1
Reading the Desktop Help states that when setting current workspace in environment settings this is used when running tools (i.e clip tool). In ArcMap I used a base name in the input for the clip tool and the output is autogenerated, in theory it should use the current workspace which is: D:\ArcGIS Workspace\Default.gdb but it uses the path: Toolboxes\My Toolboxes\Default.gdb\Building_Clip1 which seems to defy the rules.
I have already set ArcGIS home to D:\ArcGIS Workspace.
If I set both the current and scratch workspace in environments the output defaults to the scratch workspace path.