Find all the text files in all source folders. Replace the C:\ reference in the source directory name of each of the text files with C:\DestinationFolder. Create a "filler" file with New-Item -Force ...

But I'm still learning the basics of PowerShell and I'm not sure how to get the directory that the file is contained in set as a variable, or to set it as the working directory for the next command.

Copying files in PowerShell is easy. Copy-Item is your friend. Simply specify the source and destination and you're done. The same even goes for entire folders. It's easy to copy entire folders or all ...