Location of Topic Files

Required
All topics (whether HTML, PDF, or Word documents), must be located in the root folder of the web (the local/working web).
The default/front page must also be located in the root folder of the web.

Not required, but recommended
All not-topic files should be located in subfolders, not in the root folder of the web. This way you can see all topics and only topics (except for the default/front page) when the root folder is expanded in the web editor, making it easy to locate a file when needed. However, KSW can exclude files from hierarchy/index, so one can leave any number of foreign files in the root of the web, and just exclude them in KSW; a project keeps track of its excluded files, so exclusion is a one-time operation.

Topics location when starting with an existing site
You start with an existing site; your topics are spread among many folders.
Just move topics to the root of the web, using your web page editor. It will reconcile all links and references automatically. Then proceed like with a new web.