Hello Daryl, and welcome to Seven Forums.
Think of a Library as a collection point (shortcut to) of the folders/files in included folders
(ex: My Documents) from other locations.
If you add a folder /file in the root of the library, then it will only show up in the default save included folder location
and in the library.
If you open the included folder while in the library, add the folder/file, then it will show up in both the library and included folder.
If you add the folder/file in the source (ex: C:\Users\(user-name)\My Documents) of the included folder, then it will also show up in the library and included folder.
Hope this helps,