Amen to that!
I like a clean development folder. I like game.wdl and game.wmp and that's all I need in that folder. I don't even keep my .wmb in there so when what Dan describes happen and I end up with upwards of fourr more files that I don't need to reference (pallete.pcx, game.wed, game.$$w, game.$$m) it annoys...badly.
Oh yeah, and what about standard.wad? I thought that was taken care of and store with the level so that we shouldn't have to reassign whenever a project moves to a differnet folder (like A6 to A7 or release vs. beta or 32 bit system to 64 bit system (and it's program file (x86) flder), etc).