I don't think you need to create another folder for Genre. You just need to be sure you have the Genre XML in the correct system database folder. I had some trouble with this at one time. I wanted to separate my pc engine, supergraphx, and turbographx. I created a Genre XML in the turbographx database dir. Inside that genre XML I put this:
<game name="SuperGrafx 16"/>
<game name="TurboGrafx 16"/>
After I just had to make sure that I had individual XML docs titled:
Each had their system specific games in them.
Hope this helps