I'm using Calibre's tags as collections on my 505 together with PRS+ browse by folder: books I think I'll read soon I have on internal memory, all other books are on the SD card, saved using Calibre 'save to disk' in a foder structure that makes sense to me.
The reader only scans internal memory on startup, if I want to access any of the books on the SD card I do so using the PRS+ folder browser.
The availability of PRS+ was one of the reasons I went for the 505.