I think you have misunderstood - but practice will help....
The whole point of the library is that nothing
is treated differently, nor should it! LMCE 'aggregates' all media sources into a single location, precisely so that you do not need to know exactly where it is. If you have 10 Media Directors scrattered around the house, 3 NAS devices, a few internal drives, a couple of USB thumb drives plugged into 2 different Media Directors, and a DVD or CD in a drive somewhere.... every single Media Director displays all of this media, combined, in a single, consistent location irrespective of where YOU are or where the MEDIA is. That's the point. You can play any media, wherever it
is, wherever you
are, on any
Media Director... and you can find it all in the exact same location whether you are selecting it from your Media Director, webpad orbiter, mobile phone/PDA orbiter, web browser orbiter, etc, etc...
Seriously, play with it for a bit and you will see exactly why it is this way.
The beauty of the library and pnp systems is that it is aware of removable media sources. When it goes through its update process every 2 mins, any existing media sources (such as a hard drive or USB drive) that has disappeared (you unplugged it, say) is hidden from the library so that it doesn't appear. When you plug it back in, it is unhidden again so that it appears again as part of the library... This way you can have media everywhere, and unplug and plug back in again with impunity... the system deals with it, and displays only what is really available... the trick is not to think about it too hard, or second guess, just let it do its thing and all will be good
Most mp3 media is already tagged so no issue there. Other media, you really should make an effort to tag it for simplicity (!! you only have to do it once, just do it!) but even if it is an occasion where a friend has brought over some media untagged.... so what... you browse your media directory in Filename sort mode.... every media source in the house is still aggregated into a single location for you to browse... worst case, you are no worse off than normal directory browsing on a normal computer... ie no more difficult to find. But in LMCE you could easily be far better off if the files happen to be tagged.
And btw, yes, you can view files filtered based on the source... please!! just play with the system, you will immediately find those options in the media browser menus (although in practice I doubt you will ever use them!)