Thanks for the suggestions Kirk. I believe I have found the cause of the hangs (spinning ball, app unresponsive). I noticed one photo out of 4000 that wasn't showing a thumbnail. When I tried to preview this photo or sort, by capture date, the contact sheet for the folder containing this photo, Photo Mechanic would hang. I removed this problem photo from the folder and the hangs went away; I isolated the problem photo in a separate folder and got the hang on the one-photo contact sheet. Capture NX and Photoshop CS2 open and display the photo fine. I can send you the photo (1.7 MB JPG) if you think it would be helpful.
Anyhow, now PM seems to be behaving normally and I can proceed. Wrt having so many photos in one folder: If I take shots of an event or on a trip, I place them in a spearate folder. Throughout the year, however, I take a lot of "misc" shots and put them in a yearly folder (2006, 2007, etc.) and these add up to several thousand shots. I may upload just a handful of photos in one go and sometimes do that several times a day. It seems redundant to create a fine-grained date based folder structure for these misc shots since the EXIF has this information. I can't seem to generate category folders since many shots need to be in more than one category so keywords is better. I guess I could have Misc1, Misc2, etc. just to keep a folder from having more than, say, a few hundred files. Well, any suggestions here would be most welcome.