Issue 1:
I have moved my playwright config and tests folder to a sub-folder web in my repo. Upon doing this, running playwright fails:

> playwright test --config=./web/playwright.config.ts

Using config at /Users/sarink/Projects/test-proj/web/playwright.config.ts

Error: web/tests/example.spec.ts:5:16: test() can only be called in a test file

at errorWithLocation (/Users/kabirsarin/sarink/Projects/basil/web/node_modules/@playwright/test/lib/util.js:161:10)
at TestTypeImpl._createTest (/Users/kabirsarin/sarink/Projects/basil/web/node_modules/@playwright/test/lib/testType.js:76:51)
at /Users/kabirsarin/sarink/Projects/basil/web/node_modules/@playwright/test/lib/transform.js:168:12
at Object.<anonymous> (/Users/kabirsarin/sarink/Projects/basil/web/tests/example.spec.ts:5:16)
at Module._compile (node:internal/modules/cjs/loader:1101:14)
at Module._compile (/Users/kabirsarin/sarink/Projects/basil/node_modules/pirates/lib/index.js:136:24)
at Module._extensions..js (node:internal/modules/cjs/loader:1153:10)
at Object.newLoader (/Users/kabirsarin/sarink/Projects/basil/node_modules/pirates/lib/index.js:141:7)
at Module.load (node:internal/modules/cjs/loader:981:32)
at Function.Module._load (node:internal/modules/cjs/loader:822:12)
at Module.require (node:internal/modules/cjs/loader:1005:19)
at require (node:internal/modules/cjs/helpers:102:18)
at Loader._requireOrImport (/Users/kabirsarin/sarink/Projects/basil/node_modules/@playwright/test/lib/loader.js:261:14)
at Loader.loadTestFile (/Users/kabirsarin/sarink/Projects/basil/node_modules/@playwright/test/lib/loader.js:142:18)
at Runner._run (/Users/kabirsarin/sarink/Projects/basil/node_modules/@playwright/test/lib/runner.js:272:84)

// web/playwright.config.ts

import { devices, PlaywrightTestConfig } from '@playwright/test';

/**
* See https://playwright.dev/docs/test-configuration.
*/
const config: PlaywrightTestConfig = {
testDir: './tests',

/* Maximum time one test can run for. */
timeout: 30 * 1000,

expect: {
/**
* Maximum time expect() should wait for the condition to be met.
* For example in `await expect(locator).toHaveText();`
*/
timeout: 5000,
},

/* Fail the build on CI if you accidentally left test.only in the source code. */
forbidOnly: !!process.env.CI,

/* Retry on CI only */
retries: process.env.CI ? 2 : 0,

/* Opt out of parallel tests on CI. */
workers: process.env.CI ? 1 : undefined,

/* Reporter to use. See https://playwright.dev/docs/test-reporters */
reporter: process.env.CI ? 'github' : 'list',

/* Shared settings for all the projects below. See https://playwright.dev/docs/api/class-testoptions. */
use: {
/* Maximum time each action such as `click()` can take. Defaults to 0 (no limit). */
actionTimeout: 0,

/* Base URL to use in actions like `await page.goto('/')`. */
// baseURL: 'http://localhost:3000',

/* Collect trace when retrying the failed test. See https://playwright.dev/docs/trace-viewer */
trace: 'on-first-retry',
},

/* Configure projects for major browsers */
projects: [
{
name: 'chromium',

/* Project-specific settings. */
use: {
...devices['Desktop Chrome'],
},
},

{
name: 'firefox',
use: {
...devices['Desktop Firefox'],
},
},

{
name: 'webkit',
use: {
...devices['Desktop Safari'],
},
},

/* Test against mobile viewports. */
// {
// name: 'Mobile Chrome',
// use: {
// ...devices['Pixel 5'],
// },
// },
// {
// name: 'Mobile Safari',
// use: {
// ...devices['iPhone 12'],
// },
// },

/* Test against branded browsers. */
// {
// name: 'Microsoft Edge',
// use: {
// channel: 'msedge',
// },
// },
// {
// name: 'Google Chrome',
// use: {
// channel: 'chrome',
// },
// },
],

/* Folder for test artifacts such as screenshots, videos, traces, etc. */
// outputDir: 'test-results/',

/* Run your local dev server before starting the tests */
// webServer: {
// command: 'npm run start',
// port: 3000,
// },
};
export default config;

// web/tests/example.spec.ts
import { expect, test } from '@playwright/test';

test('basic test', async ({ page }) => {
await page.goto('https://playwright.dev/');
await page.locator('text=Get started').click();
await expect(page).toHaveTitle(/Getting started/);
});

If I move the config and the tests folder back to the root, and drop the --config cli flag, everything works as expected.

Issue 2:
Currently if soft assertion fails inside of test.step() test step remains with passed checkmark icon near of it.

It would be helpful if user could mark test.step() as failed programmatically, so it would be more clear in report that assertions inside of the step are failed.