Organizer does not move your photos unless you specifically tell it to do so. Thus, normally the photos are left where they are. In addition, your photos are not stored in the Organizer; they are stored on your hard disk where you put them -- Organizer is simply a database that knows (among other things) where the photos are.
If you are going to use Organizer, I suggest you use the tags, captions and notes to organize your photos, and to help you search for them at a later time. This, in my opinion, gives you organizng capabilities that are not present in your operating system, and results in a more powerful organization than what you could obtain using folders.
If you plan on using the Organizer to simply allow you to find your photos in whatever folder they might be in, and/or move photos/folders from here to there, may I suggest you don't bother. Why? Because you can do this in your operating system, and the interface is more familiar and powerful, and is less work (you don't have to import the photos into the Organizer) and has fewer restrictions. In addition, if all you are doing to organize your photos is to move the photos to a specific folder, again you can do this in your operating system, and more importantly you can never be MORE organized in Organizer than you can be using your operating system. What I am trying to say can be summarized like this: using Organizer for folder-only organization is more work for very little benefit. If all you are going to do is use folders as your organizing tool, don't use the Organizer at all, just use the PSE Editor. Using Organizer for tag/caption/note organizing has great benefit.
Thank you so very much for such a clear and concise explanation.
I have a pretty detailed system on my own and didn't want to disrupt that.
I was however interested in the tagging system since an individual could possibly be in several different folders and thought this could provide a quick way to isolate a particular subject.
Thanks again for such a great answer.
Good for you, NJTeddy, you have recognized the benefits of tags (I point out that many people just don't understand why they would ever want to use a tag instead of a folder)
In your case, if you have done a lot of folder organizing in the past, then you might want to use a hybrid organization, tags/captions/notes for some items and folders for others. That way you don't lose the organizing you have done in the past.
Alternatively, you could do all your organizing using tags/captions/notes, which is what I recommend in the long run. I realize that this is a lot of work, and you may choose to decide that it is too much work, or the benefit isn't there for you.