It appears that it may be checking for the docker-compose.yml file relative to the current working directory, so if you have specified an absolute path to the compose-file, then the check fails even though the file is in the right location for the build. Example from a run I tried:

Run hoverkraft-tech/compose-action@v2.0.1

  with:
    compose-file: /runner/_work/myrepo/myrepo/myaction/docker/docker-compose.yml
    cwd: /runner/_work/myrepo/myrepo
  env:
    GH_TOKEN: ***
    WORK_DIR: /runner/_work/myrepo/myrepo/myaction/build/work
    HOME: /runner/_work/myrepo/myrepo/myaction
    ... some other environment variables

Error:

Error: /runner/_work/myrepo/myrepo/myaction/docker/docker-compose.yml does not exist in /runner/_work/myrepo/myrepo

Originally posted by @jayrifkinsv in #21 (comment)