When adding photos to library folder names not preserved

I have Photo library with 2 different folder and bot containing subfolders. Total 42. Everything was fine in Plex, I could see all folders and subfolders as should be when browsing library.
Then I added just 1 new folder in libaray settings path. That folder is containing 658 pictures.
Now when I go and browse photos I can see that I have 707 folders!

That is not correct, I have total 43 folders now. But some how Plex is showing individual photos as folders!

Any idea how to fix this?
I have removed that and restarted server and adding it again same thing happened.

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