I have managed to remove all the folders
I don’t want from Vista Media Centre (VMC).
1: Delete ALL video files from Windows Media Player (WMP) Library.
2: Remove or ignore ALL folders in WMP watched folders except “recorded tv”
3: Remove ALL Folders from VMC except “recorded tv”
4: Delete ALL video files, folders and shortcuts from the folder \USERS\PUBLIC\PUBLIC VIDEOS
5: Delete Shortcut to Sample videos from \USERS\PUBLIC\RECORDED TV
6: Delete ALL video files, folders and shortcuts from the folder \USERS\\VIDEOS
8: Add a folder/shortcut heirarchy to the folder \USERS\PUBLIC\PUBLIC VIDEOS containing links to only
the folders you want monitored or tv the Videos folder of the normally logged on user.
DO NOT ADD ANY FOLDERS TO WATCHED LIST IN WMP OR VMC
NOTE : The above steps worked for me but cause VMC to behave a bit strangely.
What also worked was doing the above,
then adding the folder you want watched to WMP.