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I am new to lighthouse, questions on storage.
I want to use original file location to be used for edited photos including applying adjustments to them, is that possible?
If you want to use the original file location then it would be best to use Lightroom Classic.
Classic doesn’t store originals in the Cloud, but you can create Collections and sync them to the Cloud, If you require to edit on Mobile.
With Lightroom Cloud you have options to also store originals locally, but it creates its own structure that cannot be altered,
This is quite an old video now (2017) and the CC has been dropped from the names but it’s still a decent overview:
Lightroom CC or Lightroom Classic CC - Which Workflow is Best for You? - YouTube