Hi Alan,
Use the "Folder Tree Appearance" tab to display the folders in your doc library (along with "Show Folders Button under the Toolbar tab, see the docs for more details).
This will display the folder tree above the grid that shows the docs in the web part.
Select a folder and then upload some docs. The docs will be uploaded under the selected folder.
If you have any issues with the above procedure let me know.
Thanks,