I really wish they would do away with that feature in that case. I can’t see how it could be helpful. If I want that media in the current folder, I’d put it there. I often right click on events and open their source in the trimmer, then drop segments back down to the timeline.
I try to stay on ‘all media’ but inevitably I forget to switch back to ‘all media’ and screw up my organization without knowing it.