There is no such thing as an Apple Photos folder.
When you open Photos, what you are seeing is the application’s user interface to its database manager. When you drag images into that window, Photos takes those files, makes several different sized thumbnails for viewing at different resolutions and adds entries to the database so that it can find them when needed. Here is what is inside the Photos App icon…
The app creates a a default “bundle”, which is badged with the Photos app icon, and is placed in your Pictures folder. If I use Finder to look inside this bundle, this is what I see…
… and if I drill down to the Originals folder, I see…
Then you have all sorts of “stuff” in other sub-folders that are managed by the app.
What you have got, by default, is the ability too see the Photos bundle in the PhotoLab Library pane…
This is “dangerous” and you really would be better off disabling this in PhotoLab preferences…
Now, what has happened so far, is that you have unwittingly and unnecessarily “buried” your image files in the Photos bundle’s Originals folder.
In order to return to some state of sanity, you are going to need to use Finder to retrieve all those files from their automatically created sub-folders and move them to an appropriately named and arranged hierarchy under your Pictures folder…
Something like this…
… although how you arrange them is up to you.
Once you have disabled the “reading bundles” setting, you can then use the PhotoLab Library browser to point to any sub-folder in your Pictures folder, or indeed, any folder anywhere on any of your disks…
If the above isn’t clear, let us know and either I or someone else will help further