If you want to see your content in the folders you made, you can always view them with the “Files” part of the WMD app.
Otherwise, when you tap on Videos, you will see all the videos stored anywhere on both the WMD and SD card (if one is inserted). This is different than Photos, where you have the choice between the flat structure like videos, or to have your folders treated like Albums. It would be nice to have this same option with Videos, and I’ll throw a vote in for that as well.
Regarding subtitles, does the WMD video app know what to do with a separate .srt file? I’ve never dealt with .srt’s myself, but I assumed the video file looks for the required .srt by name, not by folder structure. In any case, I think you’d be well-served to use a 3rd party app for your video viewing. “It’s Playing Pro” works, and has SanDisk’s blessing. I used it until I found “nPlayer” which is even better, IMO, and I believe works with separate .srt’s (though you should check this).
Tom (just another WMD owner)