It's so interesting how people keep their libraries organized! I'm a huge snoop for things like that, so I'm loving this discussion.
I mostly just use my virtual libraries to keep my freebies separated from the books I bought, as my focus is to read the ones I purchased before I read the free ones (kinda). Here they are:
Bought (All) - both unread and read bought books
Fanfiction
Public Domain - actually I don't know why this is a separate virtual library. I suppose it seemed like a good idea at the time.
Read (All) - both freebies and bought books
TBR (All) - unread freebies and bought books
TBR (Bought) - unread bought books
I use custom columns to keep track of whether I read something or not, as per Dear Author's post on how to add that sort of thing.