User\My Docs != Libraries\Docs !

I don't recall doing so, but I will edit my post to reflect that.

mborner said:

To keep things even simpler, documents don't reside in libraries, only in My Documents, My Music, My Pictures, etc. The Libraries foleder (not really a folder) is a collection of files from all over you computer. For example, if you've got documents located all over you hard drive, including exrternal drives, they all show up in the documents library.

Somewhat incorrect, and not simpler at all. Only locations that you add to Libraries, other than the ones there by default, show up in Libraries. YOU HAVE CONTROL over libraries. The folders you add will be there.

Seeing that the OP has marked the problem solved, I suggest no further responses. In fact, the thread should probably be deleted for the amout of misinformation and confusion contained in it.

A bit belated for the people in this thread, but for the sake of other Googlers... I had the same "mismatch" problem myself (seeing subfolders in the "real" directory structure, but not when browsing from the library).

The solution (for me) turned out to be trivial. I was seeing a flat folder structure in one of my subfolders (i.e. I had a "missing" subfolder, but the files were in the parent directory). This turned out to be because the "view" when browsing that folder from the library (but not from the real directory structure) was set to "name" rather than "folder".

It's an option on the top right of the Explorer window. It seems Explorer will remember different view settings for the folder navigated to from the library, compared to the same folder navigated to from the "real" directory structure (i.e. C:, C:\Users, etc.)

Probably there's an option to stop Explorer remembering distinct views for different folders (or in this case, the same folder reached via two different methods, extra-extra-confusing).