Secret Paths:

"Choose a location in the staging area. Until the end of this phase, that location does not contribute it's threat"

Treacherous Fog:

"Each location in the staging area gets +1 threat until the end of the phase"

Secret paths was played before Treacherous Fog came out during the Quest Phase.

So does the location still not contribute it's modified value or is it's value now 1?

The location still doesn't contribute its threat strength. You'll note that Secret Paths doesn't say that the chosen location's threat strength is 0, it says the location doesn't contribute its threat. That means that the location still gets a +1 to its threat, but the threat isn't counted during that quest .