problems with external HDD?

[The111]

I have a 250GB Maxtor external HDD that I use for storing audio and video on, among other things. However, the data on the drive seems to keep going bad (for lack of more technical term), and I have to reformat and repopulate the drive. Fortunately, I keep all the data backed up on DVD-R's, so when the drive screws up, it's more of a nuisance than anything else, but I would still like to solve this problem.

I'll admit don't know much about the intricacies of data storage, but I have noticed something that I think is significant. I have about 110GB of mp3's in 1600 folders (one folder per album). I have stubbornly been trying to keep all 1600 folders in the same folder. I.e. "F:\Music\Artist - Album", so there are 1600 sub-folders in the F:\Music folder. I describe this as stubborn because I have noticed that the more items listed in the folder, the longer it takes to even open it and browse the contents. I eventually noticed that when the drive starts acting screwy and certain folders/files become inaccessible or worse (recently several hundred folders DISAPPEARED!), the problems always arise within my "mega-folder" (the one with 1600 sub-folders). I have many other folders on the external HDD besides the mp3 one I just described, but the problems always arise in there.

Is there something fundamentally dangerous about putting so many subfolders in the same folder? Is this what is causing my repeated data loss? Should I break them down into groups of a few hundred sub-folders each?

Thanks for any insight anyone may have...