MJ/MC is so flexible using the library "View Schemes" that I let it do the organizing. Here's what I have set up (keep in mind that I abhor extra clicks!!):
C:\Music\Megadeth - Risk\01 - Insomnia.mp3
C:\Music\Megadeth - Risk\02 - Prince of Darkness.mp3
C:\Music\Megadeth - Risk\03 - Enter the Arena.mp3
If I have a complete album, it goes into it's own subfolder of "Artist - Album" with the files as "Track# - Name". I tried "Artist\Album" but I quickly got tired of clicking down the tree of folders. I have the cover art stored in the folder as folder.jpg.
C:\Music\Indigo Girls - Galileo.mp3
C:\Music\Rob Zombie - Dragula.mp3
The last two are singles - all singles are stored in the root of the Music folder as "Artist - Name.mp3". I treat some complete albums as singles. Collections like the Forrest Gump soundtrack, Greatest Hits of the 80's, Masters of Rap, etc - I can't really consider those as albums since none of the songs are related to each other (except sometimes in genre). As for cover art - it is stored within the file for singles.
I don't use MJ to organize my video/image files - Explorer in XP has enough oomph for my needs. I can see dimensions, Date Picture Taken, comments, and it has slideshow, resizing, quick thumbnails...
Now with this nice simple organization, I can easily generate all sorts of library "View Schemes" - by album, artist, singles, genre, decade, and even "tag status" (a custom field indicator I set to show I've completed tagging the file). I just couldn't understand why people would even need MJ as an organizational tool if they already used their folders and file naming as complex organized structures....