That doesn't work. For multi disc games that need to be unzipped (PS1), HyperHQ needs a file extension. Typically this would be .cue but since it won't look within sub folders it's pointless.
These have both been issues for years and hasn't been fixed. As for searching subfolders, don't hold your breath. I have a .bat script run when HS closes that forces all Hyperspin.exe instance to close.