Heh...I should have caught that in the OP. When you said that your ROMs were in separate folders, I thought you meant that your ROMs were in a separate folder!
Yes, you want to put ALL of your roms into ONE folder named "games" (or whatever you want to name it). The reason is that the FAT file system can only have a limited number of files or folders on the root of the microSD card.
If you want, you can separate them into three or four folders, but obviously you don't want each ROM in its own folder (that defeats the whole purpose).
Anyway, I'm glad you got it working and I'm sorry that I didn't read your first post carefully enough! We could have avoided a very long thread!
-Bri