The search term is only applied to the file or folder name, and not the full path. There is no way to selectively filter out items based on their path.
The SearchFileSystem method performs very simple, and very fast searches based only on file or folder names, with wild cards. If you want to provide more robust searching to your customers, you can use metadata or tags and the SearchMetadata or SearchTags methods. You can use SetTags with SearchTags, or SetMetadata with SearchMetadata to make custom searches which will more closely meet your customer's needs.