Images Libraries created pre 6.0 can not be nested after upgrading
From Steve: . You have a lot of existing libraries...have you been able to figureout how to move the old ones under a parent?...doesn't seem possible, right?
I upgraded an 5.4 site and it seams that it really is not possible to move old image libraries under newly created ones
Not nice. Please PITS that as bug. Like this none of the 4.x - 5.x sites can use that feature.
This is from Slavo
"We don't have documentation specific to changing the parent of a library. We have a topic which explains how you can edit libraries (of which changing the parent is just one case). Here it is: www.sitefinity.com/.../managing-image-libraries.
There is a limitation that you can only change the parent of a non-root library. Once you've created a root library, you will not be able to move it as a child of another one.
We will update the documentation to include these details."
"The Library itself is a very heavy persistent object and is related to many others (permissions, blob storage providers, etc.). If it were made hierarchical, the complexity of managing permissions and persisting multiple of these objects would grow. Since customers mainly asked about being able to organize things in a hierarchy, 6.0 introduces a Folder object. There is not distinction between a Folder and a Library in the UI, however there is a difference. The Folder is a very light thing, which was introduced for the sole purpose of holding hierarchical relationships.
The issue you have is because of this distinction. Only Folders can be hierarchical, but not Libraries. If you want to reorganize your existing libraries, you have to make them folders. You can do this manually through the UI by creating child-libraries (which are always Folders). Then you can transfer the items from one of your old libraries to a new Folder that you've created. You cannot move a root library under another library, but you CAN move documents/images/videos from a library to a folder.
I hope this makes things clearer."
There is a section in our Sitefinity documentation connected to Folders that might be useful: