Testing with version 7.5.0 - r30311: I initially scanned the D: drive, containing four albums by three artists. I then opened the SBS Control panel, updated the Music Folder and Playlists Folder to point to directories on C:, and clicked Apply. After the scan completed, the list of Artists was updated to include artists in the folders on C: but also included a single artist from the library on D:. Similarly, the albums were updated with those on C: but the list retained a single album from D:. The playlist did not appear to update at all, and displayed only the playlist on D: but none of the playlists on C:.

The main difference I could find between the one artist/album on D: that was still displayed after the scan on C: was a playlist. The artist/album that was still displayed had a playlist (.m3u) file; the artists and albums that no longer displayed had no such file in their music folders.