Watching ripped DVD's using VMC

I've recently upgraded from MCE2005 tp VMC Home Premium. I have a heap of
DVD's ripped to my hard drive (a local HD), both movies I own on DVD and home
movies I ahve turned into DVDs.

Under MCE2005 i could navigate to these DVD's easily. Now under VMC it is
like getting blood from a stone...

I enabled the DVD Library (why this is not enabled as standard is beyond me)
by amending the Registry. No luck. Then I read that VMC doesn't like deeply
nested directory paths to the VIDEO_TS folders, so i move all my (carefully
organised) DVDs into one directory. Success! All mu DVDs appear in the DVD
Library. HOWEVER, now every DVD is in the same directory, whereas with
MCE2005 I had all my movies categaorised into subdirectories (eg drama,
holidays, comedy, sci-fi, kids etc).

Is this really the way I have to arrange my movies, or am I missing
something? If I'm not missing something, why did I "upgrade" from MCE2005?
Can anyone please give me a tip or two?