VIM 8.0.69 not honoring "backupdir" and "directory"

Hello,

I have been a vim and gvim user on Windows forever. I recently upgraded to VIM 8.0.69 and noticed it is creating backup and swap files in the same folder as the file I'm editing, even though I have both "backupdir" and "directory" set to a different location in "vimrc". I happen to be using Window 7 at my current client.

Any suggestions on what I might be doing wrong? Below are the settings I have in my vimrc if that helps.

if !isdirectory("c:\\temp\\vim_backups")
    call mkdir("c:\\temp\\vim_backups", "p")
endif

set lines=50      "screen height
set columns=180   "screen width
set nowrap
set number        "line numbers
set tabstop=2
set shiftwidth=2
set expandtab
set autoindent
set ic          "ignore case

" How to treat backup and swap files
set bdir=c:\\temp\\vim_backups,.
set dir=c:\\temp\\vim_backups

set smartindent

" Remove this if there are tabbing problems
" May want to try cindent instead
set smartindent

" Turn 'Show file types' in Syntax menu
if has('gui_running')
  " Always show file types in menu
  :let do_syntax_sel_menu = 1|runtime! synmenu.vim|aunmenu &Syntax.&Show\ filetypes\ in\ menu
  :amenu T&abs.&NewTab<Tab>:tabnew :tabnew<CR>
  :amenu T&abs.&CloseTab<Tab>:tabc :tabc<CR>
  :amenu &Syntax.-SEP1- <nul>
  :amenu &Syntax.XAML<Tab>:XAML :cal SetSyn("xml")<CR>
  :amenu &Syntax.C#<Tab>:C# :cal SetSyn("cs")<CR>
  ":amenu &Syntax.PERL<Tab>:PERL :cal SetSyn("perl")<CR>
  :amenu &Syntax.JAVASCRIPT<Tab>:JAVASCRIPT :cal SetSyn("javascript")<CR>
  ":amenu &Syntax.makefile<Tab>:makefile :cal SetSyn("make")<CR>
  :amenu &Syntax.SQL<Tab>:sqlanywhere :cal SetSyn("sqlanywhere")<CR>
  ":amenu &Lang.&Espanol<Tab> :set spl=es spell<CR>
  ":amenu &Lang.English-&us<Tab> :set spl=en_us spell<CR>
  :amenu &Tools.SPELLes<Tab>:SPELLes :set spl=es spell<CR>
  :amenu &Tools.SPELLen_us<Tab>:SPELLen_us :set spl=en_us spell<CR>
endif

set diffexpr=MyDiff()
function MyDiff()
  let opt = '-a --binary '
  if &diffopt =~ 'icase' | let opt = opt . '-i ' | endif
  if &diffopt =~ 'iwhite' | let opt = opt . '-b ' | endif
  let arg1 = v:fname_in
  if arg1 =~ ' ' | let arg1 = '"' . arg1 . '"' | endif
  let arg2 = v:fname_new
  if arg2 =~ ' ' | let arg2 = '"' . arg2 . '"' | endif
  let arg3 = v:fname_out
  if arg3 =~ ' ' | let arg3 = '"' . arg3 . '"' | endif
  if $VIMRUNTIME =~ ' '
    if &sh =~ '\<cmd'
      if empty(&shellxquote)
        let l:shxq_sav = ''
        set shellxquote&
      endif
      let cmd = '"' . $VIMRUNTIME . '\diff"'
    else
      let cmd = substitute($VIMRUNTIME, ' ', '" ', '') . '\diff"'
    endif
  else
    let cmd = $VIMRUNTIME . '\diff'
  endif
  silent execute '!' . cmd . ' ' . opt . arg1 . ' ' . arg2 . ' > ' . arg3
  if exists('l:shxq_sav')
    let &shellxquote=l:shxq_sav
  endif
endfunction

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