The problem here seems to lie in Step 4:
"4. Uncheck the option that says to copy the photos to Photos, since you have your own folder organization scheme."
You've told F-Spot not to copy your files, and thus leave them exactly where it found them. It simply adds their information to the database, and refers to the files in their original location.
If you want to use your own folder scheme, you must copy your photos manually to wherever you want them before importing.
The problem here seems to lie in Step 4:
"4. Uncheck the option that says to copy the photos to Photos, since you have your own folder organization scheme."
You've told F-Spot not to copy your files, and thus leave them exactly where it found them. It simply adds their information to the database, and refers to the files in their original location.
If you want to use your own folder scheme, you must copy your photos manually to wherever you want them before importing.