About iPod Folders
iPod folders allow you to sync photos from across multiple libraries to your photo capable iPod. iTunes will allow you to sync photos either from your iPhoto library or a folder of pictures, but when syncing from an iPhoto library, it will only sync from the currently active library, meaning you can't mix and match photos from different libraries. What an iPod folder does is allow you to specify different albums that you want to sync with your iPod from any or all of your libraries. iPhoto Library Manager will automatically copy the photos from those albums into a folder you specify (the "iPod folder"), putting each album of photos inside a subfolder. You can then tell iTunes to sync with that folder instead of with iPhoto, which will put the pictures from the albums you selected onto your iPod.
Unregistered users are limited to a single iPod Folder with a maximum of 100 photos at a time.