Yes my Favorites are that simple in the Registry - I only have one Favorite - 'Music Downloads'
I cannot think of a consistent (or inconsistent, for that matter) action that causes it to disappear.
No - I Rename, Move & Copy' the files I wish to Import, and delete the sub-folders within Music Downloads that I do not wish to Import. I do not delete the parent folder that the 'Music Downloads' Favorite was based on.
I am going to try always leaving a 'dummy' sub-folder of music files in the 'Music Downloads' Favorite to test whether deleting everything within the Favorite causes it to disappear