EDIT: OK...fiddled around with emplode a bit more. Now I understand how playlists work, kinda. It's going to take some time figuring this thing out. From the posts, it seems like people love having something like emplode to manage their music rather than managing it themselves via a directory structure.

Emplode only manages the songs on your Rio products. It will not synchronise to the structure of your hdd. to easily create playlist in emplode from directories on the hdd, simply drag the directory into emplode>playlist and the structure will be created automatically. I'm sure there's a FAQ on this.
Also note that the structure of the playlists is totally user created. the structures in the soup views is determined by the tags in your songs.

After syncing, you can move/rename/delete the songs/directories on the hdd without affecting the empeg. I personally migrate all the songs onto CDs to keep room on my drive, but it's up to you