On the 505 collections have always split into those books on the internal memory and those on the SD card, and you have to create a separate collection for each. Lets say you have a collection called Romance; you'll need to create one Romance for the internal memory and another for the SD card. It was ever thus.
I'm not sure what you're doing wrong with the rtf, but if Calibre is doing the job for you, then you seem to have solved the issue.
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