To add to freymann's comments....
If you said yes (2) but told it not to use LMCE's structure, the UpdateMedia deamon will then just try to find all media on the drive - BUT it adds it to the "other" folder structure that cannot be accessed from the media library whilst it is in Filename sort mode. The other sort modes (eg Performer, Title, etc) will access them just fine, but because they rely on attribute tagging of your media, these modes will also appear to be blank until you have tagged your media. Note that video media will not be tagged at all until you do this manually through the web interface, although if you rip a DVD it should tag it automatically from the Internet. If your audio is mp3 then this will often already be tagged internally from when it was ripped.
As freymann pointed out, you should definitely use option 3, if you chose any other option, you really need to remove that drive from the LMCE configuration, and allow it to re-add and use option 3. As soon as you have moved your files into the folder structure it creates, you will start seeing your media appear under the Filename sort option in the media library even if you haven't tagged the media.