Just create shortcuts in Public Videos/Pictures DON’T use Media Center’s library function it’s much faster loading and looks alot neater without the NETWORKPC// before network shares.

FOUND SOLUTION TO KNOWN BUG
It seems there is a known bug in certain versions of Windows Media Center (ie, Vista Home Premium, Vista Ultimate and Windows 7 Beta) in which even when you remove a folder from a music/picture library in Media Center, items from those folders are not actually removed from the Library. I searched around and didn’t see much help, until finally I found this solution from a guy who works at Microsoft:

I had no problem with doing this since I just wanted to reset the library completely and do a re-index.

Since Windows Media Center and Media Player share the same database (or library), these instructions will resolve problems for both applications at same time.

The instructions are:
Exit Windows Media Player.

For Windows XP:
Click Start, click Run, type: %userprofile%\Local Settings\Application Data\Microsoft\Media Player, and then click OK.

For Windows Vista:
Click Start, click Run, type: %LOCALAPPDATA%\Microsoft\Media Player,
and then click OK.

Select all the files (not folders), and then click Delete on the File menu.
Note: You do not have to delete the folders that are in this folder.

Restart Windows Media Player.

Note Windows Media Player automatically rebuilds the database.

After deleting all the files, Windows Media Center’s library was completely reset. This procedure removed all of the unwanted (or invalid) folders that I could not remove before and I re-added the folders I wanted. Everything has worked fine since.

Hopefully this post will help other’s who might run into the same problem.