I should have explained. If I remember correctly, you enter the new file name you want (I found this fiddly) at the select folder stage. It isn't created till you take the next photo, which will store in it. After that you can select either folder.
I only just found this thread and can see all your questions have been answered. I too came to the XS10 recently after using Pentax SLRs since 1969, and of course Pentax DSLRs later. Really just welcoming you here. I set my XS10 similar to yourself except I do prefer the lens aperture ring. I still can't get used to having to switch the camera on before focusing and zooming, when with DSLR I very often did that first, before deciding whether the shot would be worth taking. That habit probably came from starting with film SLRs.
I tried both XT4 and XS10 before buying and much preferred the latter's handling, my only concern being its lack of weather sealing, because that was always a Pentax feature I found I could trust.