I use it from within the TC directory itself since I’m usually developing/testing the theme either against my local dev instance, a dev copy of the forum not on my machine, or the Theme Creator site (which the API key generator doesn’t seem to be working lately). Trying to avoid getting confused about which environment I’m working in.
I’ve git cloned the mermaid TC into the same codespace as a fresh discourse codespace install and tried to run the discourse_theme watch from the discourse directory instead. Gives the same errors.