I...don't think naming it wads would help... do you mean you just made a wad folder and put the actual .wad files on the root? I'm assuming you actually meant the wad folder has the .wad files inside the folder and the folder is on the root(which is how it should be), but it doesn't hurt to make sure.
And is this in that step after downgrading IOS35 and loading wad manager to install IOS35? Is your sd card formatted to FAT? If it's NTSC or something you need to reformat that and put the stuff back on it properly. But you were able to run the IOS35 downgrader through bannerbomb with it? Hmm...then that's probably not the problem. Well alternatively you could run the hackmii installer through bannerbomb to install the HBC (and bootmii while you're at it.) and then try running the rest of the things through the hbc instead.