I believe that if the files are not in a format that the Clip recognizes, the Clip just will ignore them. I was referring to, e.g. mp3 files stored outside the Clip’s Music folder.
I believe that it will add all mp3s to the database, no matter where stored. But you could experiment/perhaps do something with the properties of a folder on the Clip to avoid that.
The clip will search, recognize and display in musiclist, any file extension it supports (mp3, wma, ogg, wav) regardless of where it is in the heirarchy (root, music folder, created folder, etc.).
The work around to this would be to set the files as hidden and the file will not show up on the clip, but this ONLY works for WMP11 MTP drivers. The msc did not implement this.