Add Reference To Project

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C#

ASP.NET

I was wondering how adding a reference to bin\*.dll works. After selecting my dll from a differenct web app to add as a reference (to use existing classes in other code) and deploy this new web app, how does the other code get utilized? What I mean by that is does my other code get "built" into this new dll? Reason for this question is that my employer has paths different to project: on local development computer it is in folder named "local" on test server it is in folder named "test" and on live server it is in folder named "live". So I am concerned about adding reference to original code in "local" folder and then when goes to test and/or live server this new project is looking for original dll in "local" and that is not where it exists. So when this new project goes to test or live server, will new web app be looking in "local" folder to find original dll or when build new web app does it "build" the old dll up into new dll?

Thanks,

Brad