I had assumed from your previous post that you were intending to buy LR4, since you were doing client work on it. Sorry if I misunderstood. Installing LR4 trial should not have prevented LR3 from still working, at least that was my experience. Also when you upgraded your LR3 Catalog to LR4, this conversion was done to a copy, not to the original.

So both your previous LR3 software and its related Catalog may still be in place and just as usable as before, with the images that pre-date your use of the LR4 trial.

If you have imported images into the LR4 trial, they will have by default used the new 2012 process version. Even if your edits under this PV were written to the files as metadata, importing these into LR3 will leave you some corrective work to allow for the only semi-compatible develop settings. However keywords etc should be fine, if (as I say) these were written-out. as well as stored in the Catalog.

Many people have found the transition process from LR3 to LR4 smooth in practical terms, with the new process version adjustments as the only awkward part. I can't explain how LR4 could have behaved any differently in terms of keywords, import process, image locations and paths etc since these things have not especially changed from LR3. The only non-obvious aspect here is that unless you separate them deliberately, the two Catalogs - LR3 and LR4 - are SHARING the same physical files on disk. So deleting or moving image files in one software version, will have an impact on the other sotware version's library.

LR3 and LR4 are independent installations - although some locations are held in common for presets, lens profiles etc..

Normally the catalog conversion process retains the folder display, collections, history, virtual copies, keywords, everything, 100%. This will not be the case if you make a new catalog for the new version and import your images afresh into that - LR is in that case starting again rather than maintaining continuity.

IMO Lightroom is all about the safe and smooth continuity of your images and their edits. Its default behaviour is always to preserve (reversibly) rather than to change.

On your query about child folders: when you have a "loose" top-level folder displayed in the Folders list, this is often simply that LR is not yet displaying enough of the folder structure in order to show the various images in their correct folder relation.

By right-clicking on such a folder and selecting "show parent", the next level up in the file system will be added to the Folders panel and this folder will show nested inside that (and so will any others which share that parent) - the listing will automatically move around to reflect this slightly more complete display of the overall file system.

You can show as much or as little of the drive volume as you want; what counts for image organisation is the useful relative relationships between relevant folders. It is not necessary to see the entire path; just the internal structure of the part within each drive volume where your LR-related image files are stored.

regards, RP