I read this several times before I parsed your question correctly. To make sure I understand: you just want to know if you can keep your files separate on the same hard disk. The short answer is: yes, you can. The library function has options to restrain it to only those directories you choose to catalog.
To automatically add files from specified location(s) in Windows Media Player11 under WinXP: Tools > Options > Library > Monitor Folders
and--
To choose the location to store the files you are ripping: Tools > Options > Rip Music
In general, when sharing a portable or other outboard hard drive, it's good to set some ground rules for keeping multiple users files separate, such as just a couple main directories [ex: MyFiles, Your Files, OurFiles] then structure your own files/folders as you like within.