No it won't say "artist folders" - Artist Folders I meant in the same way of "your name here"

In my set up it's My Music > iTunes > then a bunch of folders with artists names, such as Guns N Roses or Girls Aloud or whatever. Inside these folders are the music files.

But, if you go into iTunes again, find the song you want, and right click on it, you can select "Show In Windows Explorer" and it will open a folder where the file is.

As for create MP3 version, there is a setting in iTunes preferences to change between "create AAC" and "create MP3", but I don't have iTunes on this computer so I can't double check it for you.

However, another work around is;

Download this; http://www.nch.com.au/switch/plus.html (click GET IT NOW for the free download) and install it. It's a format converter, very simple to use. Drag the AAC files into it, tell it to convert to MP3 and it will do it for you. Then you can drag these MP3's to your MP3 player.