Edit: Nov 14, 2009. This post is updated as an online guide here and as a PDF here.
Holy crap. This guide is amazing! I have myself a new project; I'll report back with my findings.
EDIT: I am lazy so I wrote a script that makes a directory for every AVI/MKV file and moves the file to the new directory. I hope this is useful to people using this guide. Download each script below. If you want to do the same for MPG files etc, then edit the script and replace AVI with MPG. The reason I didn't do *.* is because I didn't want it trying to move the batch file.
Download the .BAT file, put it in the folder with your movies and run it. It will come up with a bunch of errors, but it works. It's too late here to try and make the script perfect, but it woks