The only folder that you have to care is the "maps" folder. It's only in this folder that the engine will look for loading a map, for packages the "content" folder is the minimum.
Yes your packages have to be in the same folder as the rest of UDK. UDK doesn't look outside this folder. However you can make sub-folders which have your content in them to separate them out from existing content. How you choose to do this is up to you.
I'm trying to figure out how to manage content in UDK, but I'm not finding a clear explanation of where I should be saving my files, or how my content is separated from the content that's included with UDK. I've been trying to work from my own folder outside of what's created with the UDK install, but I get external…