I even have folders divided up into more Sub folders, based on characters, time of day, individual story events, etc.
For example, my story "Billy Roy's Lodge and Show Jumping Camp" has a folder called "Billy Roy Story" and then contains folders such as "Character Portraits", "Lodge Visitors", "The Meteor Event", "Beach Picnic", "Perfect Jumps", "Meeting Cheri Montalvo". So I have all my main characters, locations, and important events organized.