I found the problem . It was not an installation issue per se, but a model mismatch issue. A problem with pre-compiled model versions and OpenVINO versions. It is documented here: https://github.com/openvinotoolkit/openvino/issues/411 . Unless I want to start building my own OpenVINO versions I guess I'll just have to wait until someone fixes it.
The workaround is to revert to earlier models and everything works as expected -> can use different image types and output occurs in the run directory.
Here are the commands to get the old models (I deleted the new ones):
I'll probably discover a bunch of issues like this as I play around more but hopefully there won't be any specific to differences between the NCS and NCS 2. Looks like the delivery of the NCS 2 will be on Tuesday.