V-Ray Material from File loads a .vrmat file. Click on the field to open a file browser window and select a .vrmat file.
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Right-click on the component to open V-Ray Material from File context menu.
Use the options to import your materials or use the material presets from Material Library or Cosmos Materials.
Note that invalid input file paths are auto-resolved as long as the files reside at the same location as the .gh project file.
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Starting with V-Ray 7, Library Materials are no longer available and have been removed from their default location at C:\Program Files\Chaos\V-Ray\V-Ray for Rhinoceros