My guess is that you are using a too old version of SML/NJ with an old basis
library. I am using v110.9.1, and in the version that came with that,
OS.Path.mkAbsolute has type
{ path: string, relativeTo: string } -> string
In some older documentation files, I see that it used to have type
string * string -> string
which (from the error message) is what you have.
I guess it is time for you to upgrade your SML/NJ.