I keep mine in an overall music folder,
then folders by genre,
then folders by artist names,
the folders by album title,
then the actual music files.
I don't usually bother with track numbers.
Things are more or less in alphabetical order, since my computer does this for me already.
Almost all of my musics files have been ripped from CDs (using Sound Juicer), and are in .flac format. The total is about 110 GBytes of music and stuff.
The others are mp3 downloads from various companies I buy them from.
Scattered in amongst the various music files are text documents of lyrics, tablatures, chords and so forth. Also scattered in there are pictures of album art, pictures of artists, and so forth. As well as miscellaneous stuff like play lists for Amarak, recordings I have made on the computer, compilations of various types, and so forth.
It works for me.