When I add a path in the presets tab, I can add models that are in that folder using the WED Add Objects dialogue. If I try to use any models that are in a sub-directory however, WED gives me an error saying that it can't open the file.

For example, I add the path "models" in WED. When I add the model "pguard3.mdl" from the directory "models\palace-guard" and try to run my level, WED can't open it. It seems that the only way that WED can find the model file is if I add the sub-directory path. Do I have to add a path for every sub-directory?