Bobby,
as you know, I have an F48.
I have a 64GB USB drive, formatted Fat32 with over 400 albums on in MP3 320 (and still some spare space). So, it will cope with at least a 64GB drive. I suspect yours might be an Apple compressed format.
I tend to organise mine as Artist - Album>Track (for reasons of compatibility elsewhere) but I can't see why your structure wouldn't work. (though I wouldn't bother with the "Music" level).
I'm pretty sure there is a write-up somewhere on limitations and recommended structure, but it's not in my downloaded copy of the printed manual (it may be in the Drivers Guide App I have on my Tablet - I'll check later).
You can search by folder, but the media system uses the tags in the files for other searches.
As a tip, I use a "small form factor" USB drive, like the Sandisk Ultra Fit, since these leave very little body sticking out of the socket, making it much less likely you will inadvertently catch it and break it (since the USB socket position is rather exposed).
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