Unfortunately the Phatbox/Keg doesn't work from 'Folder' structures, it uses M3u playlists coupled with playlist indicator files, which have the extension PBX.
Essentially it loads PROFILE.INI to determine the number of playlists available to you, then scans your profile directory [PhtData\Profiles\Default] to list that number of PBX files, which in turn have an associated M3u file.
It uses the PBX to display the current 'album' data on the Head Unit, and then uses the (pre-formatted) extended data from the M3u file to display the track data on the Head Unit. This data is created by the PhatNoise Media Manager software and you need to make sure that you have the appropriate 'format' selected for playlist generation so that it displays correctly.
In PhatNoise Music Manager, check out the option 'Pattern for Created Songs' under 'Options' and on the 'CD Encoder' tab.
In PhatNoise Media Manager, go to options and take a look under the 'Music Directory' option, I believe it's using the 'File Name Pattern'.
However to do what you want - you you would need to confident about manually hack the M3u and PBX files. Confidence aside, manual hacking would also require you to re-generate the associated .SIG files to ensure the playlists are recognised by the PhatBox.
For a quick fix for what is being displayed on the Head Unit, you should also take a look into the firmware properties.
In PMM under 'Options', 'Firmware / Plugins', 'Properties' take a look at the different 'List Title Text' options. You are probably set to the factory default setting which is a pretty bland setting. Try setting it to 'Disc Text' to get rid of the playlist mode/disc number and just to show you the text only.
One thing I will be doing with PhatHack Media Manager is to ensure that any modificaton to the 'Pattern File Name' or any other option that needs to be applied globally is applied globally.
Right now, my playlist data is all over the place because of PhatNoise - and it's one of my biggest gripes which spurred me to write a replacement!