I think twrp flashes ok from any spot using Flashify. But it just wont pick up system if its formatted in ext3 and it wont pick up the MicroSD card if it is not formatted in FAT32. So between those 2 problems, things got confusing when I tested by flashing the twrp theme. TWRP just flashes a zip to external_sd/TWRP/theme. So it wasn't a question if I was doing something right or wrong. Just a question of me not being thorough enough to find that out right away. I should have tested all this out.
Its just been a hassle is all hehe. So what I have found out is:
TWRP will not flash to/from /system if formatted in ext3 ( I made Legacy Rom with system formatted in ext4 for this )
TWRP will not flash to/from a card not formatted in FAT32. ( size doesn't seem to matter I tested in 128GB FAT32 )
** edit : tested exFat and it seems to work with TWRP.