Kent Wallace keeps his xref files under control through specific storage requirements. 

"This is how I store xrefs (and require my contractors to do the same) so I’m not hunting for 'lost' xrefs. This has been working for me since AutoCAD R12. My office is currently running AutoCAD 2008. We are planning on the move to AutoCAD 2010 soon. I hope this can be used to help others."

- Dwg (Contains all numbered drawing files)

- Xref (Contains all external reference drawing files)

Note.  The Dwg and Xref folders can be moved anywhere as long as their relationship to each other remains the same.

• In the Tools menu, click Options to display Options dialog box.
• Under the Files tab, highlight Support File Search Path.
• Click Add.
• In box, type: "..xref” (without quote marks).
• Click OK.
  

Note: The above step is only to accommodate the few drawings that do not have properly pathed xrefs.

• Bring up External Reference dialog box.
• Type Xref at Command prompt and press Enter.
• Click on Attach DWG icon.
• Locate file to insert, highlight it, and click on Open button.
• Make changes in dialog box as desired.
• Change Path Type to Relative Path.
• Click OK.

Notes from Cadalyst Tip Patrol: Adding an …Xref folder to the support file search path will generate a “Folder Does Not Exist” error if there isn’t an xref folder in your working folder. But you can add it anyway. This step will help AutoCAD know to look in the xref subfolder, and you only have to do it once. 

Having a directory structure (or folder structure) is important. It makes things easier for everyone because we all know where the files are kept. The important thing is to have a structure and stick to it.