Comment 8 for bug 1223069

The sub folders feature should apply to both files in 'public' and files in folders other than 'public'. Of course the same restrictions should still apply, meaning that users can still only use the files in 'public' and its sub folders to re-use them in their portfolios.
And I think it's a bug fix and not a feature since administrators can currently link files in the 'link and resources' menu that are in a sub folder and users still cannot access these files :-)