This is a common point of confusion; when you read "media library" you're thinking of your files. When JRiver refers to the "library" it does not mean your media files, it means the database containing the metadata from your files. You media files are separate. That's why the "library" is so small, it doesn't have the data in it, just the metadata.
So when JRiver talks about backing up the "library" it doesn't make a backup of your media files (I got caught by that myself once), it just backs up the database. The issue with CD's not going to the same place is a separate issue, you can specify where you want ripped CD's to land under options, but it's a separate setting from the library location because the library in JRiver is just the database, not the files.
Changing the ripping settings will fix the file locations going forwards, but if you want to rearrange existing files, look into the Rename, Move, Copy tool in media center:
http://wiki.jriver.com/index.php/Rename,_Move,_and_Copy_FilesEdit: whoops, ninja'd