Hi Steve:
Don't feel bad about not being sure what is stored on the CF card and what is stored elsewhere inside the GPSR - it's not exactly intuitive.
For the record, here's a list of what goes where:
Inside the GPSR (not on the CF card, Garmin card, or in map memory):
1) The system software that runs the GPSR.
2) User Waypoints - now called 'Favorites' on the newer models.
3) Routes
4) The track log
5) Marine proximity waypoints (e.g. on 276 and other marine/auto GPSRs)
6) Jeppesen data, terrain data, obstacle data for aviation GPSRs
7) Voices without names (not the newer 'text to speech' voices)
8) The satellite almanac (like a TV guide for the GPSR, the almanac tells the GPSR where the satellites will be)
9) User configuration data (settings), including the position the GPSR was in when it was last turned off.
On the CF card, Garmin card, or in the memory allocated to map storage:
1) Maps (duh...

)
2) Automotive Proximity Waypoints (speed cameras, etc.)
3) Music and Audible Books, if your GPSR supports this (e.g. 28xx, 7xxx)
4) Voices with names (the newest generation of voices that can pronounce street names on 27xx, 28xx and 7xxx GPSRs)
5) Lists of BMW dealers, if you have a BMW Navigator
6) Anything else you want to store in free space on the CF card (you copy the files directly from your computer to the CF card).
Your idea of loading the CF card by sticking it directly into your computer is an excellent one - that is the fastest possible way of loading the card. You can buy a PCMCIA adapter that holds a CF card for about ₤10. Use MapSource to build the mapsets and transfer them to the card - MapSource will detect the CF card once your computer operating system (Windows) mounts it.
Do not defragment CF cards - it screws them up and shortens their useful life - and do not mess with the folder hierarchy on the CF card. Do not reformat the CF card either. I think that the CF cards that come with Garmin GPSRs are FAT 32 format, but I'm not 100% sure about that (only about 98% sure). If you have used the card in some other device - such as a camera - that does not support FAT 32, you might have to reformat it back to FAT 32 before it works again in your GPSR.
Hope this info helps.
Michael