There's a thorough discussion of this bug and identification of a workaround in this thread on the Subsonic forums.
My file structure is, for the most part, as follows:
Z:\Music\%genre%\%artist%\%date% - %album%\[Disc %discnumber%]\%tracknumber% - %title%
However, for some singles for which I already have an artist folder, I include them in the root artist folder as follows:
The problem is that folders that do not have single mp3s directly inside are sorted first, and then all other directories are sorted. I've attached a screenshot showing what this looks like. In this screenshot, the folders Metallica, Metric, Muse, Plain White T's, and Rufus Wainwright have single mp3s in them. All other folders don't.