The PDM interface runs on the Windows Explorer process which has a limit of about 4 billion files per folder inside NTFS. Performance and stability really tank above 1000 items in a single folder. There are a lot of options when it comes to tuning for NTFS, but I would not recommend going down that road if not absolutely necessary.
To keep this short:
1. If possible stay under 250 items per folder.
2. Do NOT go over 255 characters in a file name, which includes the path!!!
3. Sub-Directories are not expensive when it comes to performance.
Best of luck!