How does Windows Photo Gallery work? Does it collect my pictures from around my computer and move them, point to them, etc.?

I have been in tears over my pictures, because they are ALL OVER my computer, duplicates everywhere, etc.

Question: Does Windows Photo Gallery collect all my pictures from all over my computer and move them into its own folders? Or, does it just point to them, and they are still all over the place?

I have just gone through my entire computer, and moved all 20K plus photos to an EHD. I am moving them off my computer so I can put them back in ONE folder system and not lose them, duplicate them, etc.

I accidentally opened Photo Gallery, and it looks like it has re-populated all the folders I just moved OFF of my computer onto my EHD. ...

Help?

And Thank you