After further research on the net, here's what I found. Might be worth a try.
Yes, it does matter that the folders are named "ringtones", "alarms" and "notifications", but, case does not matter, and, it doesn't matter where those folders are on the SD card -- they will be found because of the folder name. Some people put them off the root of the SD card (i.e. SDcard/ringtones). Others put them under a "Media" folder (i.e. SDcard/Media/ringtones). Others under a "Media/Audio" folder (i.e. SDcard/Media/Audio/ringtones), etc. Just make sure the folders are named "alarms", "ringtones" and "notifications" and you should be fine using personalized sounds.
Although, from my experience, it is true that you can certainly configure a ringtone for example, that resides in ANY directory, when the phone is set for personalized rings for certain contacts, then they really need to be in a folder of this name (ringtones) to ensure it is found for that specific contact at the appropriate time. Presumably, this will avoid the intermittent playing of the wrong ringtone for personalized ringtone contacts. The reasoning is that these folder names are specifically tracked when the phone is started (preparing SD card scanning) and remembered for later use.
-Frank