I can’t drag a ‘folder’ into the program (version 1.24, win xp)- I must select the audio tracks and drag them onto the window, so I am confused by what you say.
Anyhow, here is my method of operation: Within the desired folder (album/concert/what have you) I create a new folder with mp3 added to the name, then when setting up the conversion in Switch, browse for that destination folder, and of course set the output format and encoder options. Or you can also create a new folder during the conversion set up within the program itself.
So I believe your answer is yes - you should create a destination folder to land the files in, which is pretty quick and easy. Good luck!