Is there a way to create folders for the in-game character browser so that you don't have to scroll as much to select the one you want?
Yes there is, but it's
somewhat tedious and
not at all user-friendly. You'll need to setup the folders externally by messing around with actual file folders and TXT files in Windows Explorer. Once the subfolders have been created, you
can't just drag-and-drop your in-game characters portraits into the appropriate folder
(drag-and-drop is kinda allowed, but it only rearranges the order of things). Whenever you want to alter the hierarchy, you'll need to exit the game and muck around in Windows Explorer.
You can find working examples of Character Folders (and subfolders) in each of the major modpacks.
ModGuy's and
sby's modpack each includes the [DevExamples] folder, and
krizalid's bundle has a nested folder containing various [Male Mods].
@Huitznahua has written up a thorough
introduction to SDT gameplay and modding, which includes a section on Character Folders. If you find the material to be incomplete or confusing then I'd suggest leaving feedback on his thread
(instead of replying here) -- so that the material can be elaborated and improved. Hopefully, the end result will be sufficient to answer your questions
and also to provide useful guidance to new users in the future.