Problem with Windows 7 Library Presentaion in Media Center

I think I have found a potential bug in the display of files in the Libraries view vs. the way they are viewed in Media Center on the same box. I LOVE the concept behind Libraries - one consolodated view of all media of a specific type. Splice in a new folder and the media is "just there" for the Library view and in Windows Media Player. However - Windows Media Center doesn't appear to show the files the same way and I want to know how to either correct for it or if it is "expected behavior".

Folder structure:
C:\
|----Users
|-----Public
|---Public Videos
|---Video 1
|--- Video1.m4v
Z:\ (Seperate Physical Drive)
|-----Libraries
|------Video
|----Video 2
|----- Video2.m4v

When configure the Video library to contain the following paths:
C:\User\Public\Public Videos (there by default)
Z:\Libraries\Video

I look at the library view (Libraries->Videos) I see the following:
Public Videos
-Video1
Libraries
-Video2

I look at the Videos folder in Windows Media Player and I see:
Video1
Video2

When I look at the Windows Media Center "Video Library" I see:
Video1 (Folder)
|-Video1.m4v (video)
Video (From z:)
|-Video2 (Folder)
|-Video2.m4v (video)

What I WANT and expect (from the views in Libraries and Media Player) to see is:
Video1 (Folder)
|-Video1.m4v (video)
Video2 (Folder)
|-Video2.m4v (video)

What I can't understand is why it treats the C:\Users\Public\Public Videos different from any other folder.

I've also tried putting the Video2 folder in a folder off C: (C:\TempLibrary) and added it to the Library as I did with the one in Z: and had the same result.

I don't know if there is a file/folder ACL that I can't find or some way to tweak the registry, or if it just is a bug in WMC.

Any help is appreciated!
Andy


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