7zip command not extracting to specified output directory

I'm using 7za.exe (command line version) but the same holds true for 7z.exe. Take a look at the help message carefully:

7-Zip (A) 9.20  Copyright (c) 1999-2010 Igor Pavlov  2010-11-18

Usage: 7za <command> [<switches>...] <archive_name> [<file_names>...]
       [<@listfiles...>]

<Commands>
  a: Add files to archive
  b: Benchmark
  d: Delete files from archive
  e: Extract files from archive (without using directory names)
  l: List contents of archive
  t: Test integrity of archive
  u: Update files to archive
  x: eXtract files with full paths

<Switches>
  -ai[r[-|0]]{@listfile|!wildcard}: Include archives
  -ax[r[-|0]]{@listfile|!wildcard}: eXclude archives
  -bd: Disable percentage indicator
  -i[r[-|0]]{@listfile|!wildcard}: Include filenames
  -m{Parameters}: set compression Method
  -o{Directory}: set Output directory
  -p{Password}: set Password
  -r[-|0]: Recurse subdirectories
  -scs{UTF-8 | WIN | DOS}: set charset for list files
  -sfx[{name}]: Create SFX archive
  -si[{name}]: read data from stdin
  -slt: show technical information for l (List) command
  -so: write data to stdout
  -ssc[-]: set sensitive case mode
  -ssw: compress shared files
  -t{Type}: Set type of archive
  -u[-][p#][q#][r#][x#][y#][z#][!newArchiveName]: Update options
  -v{Size}[b|k|m|g]: Create volumes
  -w[{path}]: assign Work directory. Empty path means a temporary directory
  -x[r[-|0]]]{@listfile|!wildcard}: eXclude filenames
  -y: assume Yes on all queries

You see how it's clearly mentioned that the switches are -o and -w? As in, there's a hyphen preceding the switches but not the commands. Also, the colon is not part of the switch itself. If it was, then you should have similarly used x: instead of just x for extracting with paths. Consequently, your weird usage of o:<Path> and w:<Path> is the reason for your headaches.

Use something like this to compress a folder recursively and store relative paths:

7za a -r Archive.7z C:\InputFolder

Use the following to extract to a specific directory:

7za x -oD:\OutputFolder Archive.7z

Obviously if your folder names have spaces in them use double quotes.