The story pitched by Paul O'Connor was set in a Slig Birthing Complex
[1], not the Slig Barracks. I think the confusion is because Paul compared the size of the proposed game to the size of the Slig Barracks levels.
But consider that was one pitch 17 years ago. The premise of 'albino Slig fights persecution' has evolved a lot in that time. There's no reason to confine it to existing sets. The only thing that's been set in stone is that the poor chump is sitting there in Alf's bar.