The whole premis of this is that I store my games under
Games\shooting
Games\fighting
Games\misc
Games\racing
and tHc would pretty much make me have them all in Games\
anyway screenschot one is just the basic tab I use my multi items per tab mod I made to make it switch between .:Games:. , .:Applications:. etc with the onleft and right butons

next is inside the Games tab yeah i know the listed ones arn't games but I'm showing you how it all works. The ones with .: :. around them are the sub dirs and the other ones are the games or in this case apps I copied to my root games dir for an example.

This last one just shows you inside the sub dir note the title on the window of .:games:.\.:Racing:.

So how did I do it
Well basically I modified the launch code to repopulate the menu with the selected item if default.xbe was not found in the dir. I then stored all the parent dir info in some vars and modified the press B command of the submenu to check if the flag subdir was true. If it was it then it repopulated the menu list with the stored parent dir info instead of exiting out to the main menu.
I also modifed all the list popuate code to check for default.xbe and if not add .: and :. to the name so as subdirs would get sorted to the top of the list.
Which means before launcing the sub dir I had to remove these to get the list to populate with the right dir
anyway have fun and hope you like it