You need to create the folders under the product images folder to be able to find them when adding products.........
In you file manager navigate to the Product Images Folder and View it then create the 2 folders you want there, upload whatever images you want to each. Then when you go to browse for the image you will be able to see those folders.
The Product Editor only looks for product picture in the Product Images Folder or anything created under it.
The other option if you do not want to do that is to type the path in manually such as ugamerchandise/name-of-file.gif or jpg whatever it is.
Hope this helps..........