Do the parts need to be saved inside a single folder to make things easy to gather? I realize that the folder structure makes it easier to find something, for example, a valve, or pump with a sub folder.

I would like to leave the project folders the way they were finalized because this provides a reference to what files were used in the assemblies and perhaps is saved in a way that allows you to make changes inside that folder. Again, I am not clear if the Solidworks Assemblies and Parts (Components) need to reside in the same working folder?