I have a PRS650 and went through an update sequence much like yours. As far as I remember the
/database/system subdir was created by PRSPlus during installation. Even if it wasn't there's no reason you couldn't create it manually as there's so little in it. Here's a screencap of the dir structure on mine.
Edit: Sorry did you edit since I started to post? I seem to be answering a question you're no longer asking